Responding to latest official figures, showing labour productivity fell by 0.5% in Q2 compared with the previous year, Tej Parikh, Chief Economist at the Institute of Directors, said:

“These figures hammer home the impact uncertainty is having on the business environment.

“Unsure of what’s around the corner, businesses’ investment in the new equipment and technology that drives up their performance has been stifled. Many companies are also trimming their investment pipelines for the year ahead to build up a cash cushion in anticipation of challenging economic conditions ahead.

“Policymakers have been distracted from putting together the various pieces of the productivity puzzle, ranging from the skills agenda to infrastructure improvements. It will take a while before recent pledges by the Government on road and broadband networks filter into the productivity numbers.

“In the meantime, cost reliefs and investment incentives are a must in order to give UK productivity a jolt. Business leaders would welcome an extraordinary Budget to support productivity increases, which will be crucial come no deal or otherwise.”