UK labour productivity collapses

UK labour productivity is collapsing. In the fourth quarter of 2008, it declined by 1.5 percent.

The reason for the decline in straightforward. Firms are hoarding workers. Demand is falling, firms are producing less, but they haven't yet got round to downsizing their workforces. However, firms are not charities. Sooner or later, firms will start to the painful process of cutting cuts and making workers redundant.

So this number is telling us to brace ourselves, unemployment is about to increase very rapidly.