Productivity in decline

During the Covid-19 pandemic Northern Ireland saw its largest improvement in productivity, moving up from last to seventh place amongst the UK’s 12 regions. However, in the 2025 Northern Ireland Productivity Dashboard, it fell back to eighth.

The 2025 Northern Ireland Productivity Dashboard, published in December 2025, shows that productivity in 2023 was 12.4 per cent below the UK average, equivalent to 87.6 per cent of the UK level. This represents an improvement on the 13.2 per cent gap recorded in the previous dashboard, with Northern Ireland rising from 10th to eighth among the UK’s 12 regions.

However, the improvement is largely relative rather than the result of higher output per hour. Productivity remained at £40 per hour in both 2022 and 2023, meaning it has not increased since 2021. The improved ranking instead reflects weaker performance elsewhere in the UK, alongside revisions to ONS data.

The gap is more pronounced when Northern Ireland is compared with the Republic of Ireland. Productivity in the Republic is approximately 9 per cent above the UK average and around 25 per cent higher than Northern Ireland.

The dashboard identifies significant weaknesses across the factors that drive long-term productivity growth. Of 20 indicators assessed, 13 are below the UK average, while only four are above it.

Eight drivers have consistently lagged the UK average since the first dashboard in 2022:

• innovation-active businesses;
• business births, low skills;
• employer-provided training;
• political uncertainty;
• economic inactivity;
• long-term ill health; and
• foreign direct investment.

On business dynamism, only 9.7 per cent of Northern Ireland’s enterprises were newly created in 2024, compared with 11.2 per cent across the UK, placing Northern Ireland 11th among the 12 regions. Only 32.1 per cent of businesses were innovation active between 2020 and 2022, again below the UK average of 36.3 per cent.

On skills, the dashboard states that 42.2 per cent of the working-age population held a tertiary qualification in 2024, compared with 47.1 per cent across the UK, 10.7 per cent had no or low-level skills, compared with 6.9 per cent UK-wide. Only 56.2 per cent of employers provided training in the previous 12 months, against 59.1 per cent across the UK.

Management practices also emerge as a weakness, with Northern Ireland scoring 0.52 out of one in the 2023 Management and Expectations Survey, below the UK average of 0.55 and joint-last among the regions.

Infrastructure and investment present further challenges, as foreign direct investment stood at £23,916 per job in 2023, compared with £65,609 across the UK, while gross fixed capital formation was £4,725 per job in 2022, against a UK-wide rate of £8,561.

Despite these challenges, the dashboard nevertheless records progress across several indicators, with 11 of the 20 drivers improving over both the short and long term. Gigabit broadband coverage reached 94 per cent of premises in January 2025, above the UK average of 84 per cent, while 55 per cent of adults participated in lifelong learning over the previous three years.

The Productivity Forum argues that closing the productivity gap will require coordinated action across the public service rather than a single policy intervention. Although productivity is identified as a priority in the Executive’s Programme for Government, the document contains no specific recommended target for reducing the productivity gap.