We need to bridge Britain’s productivity gap

The UK has a big productivity problem. Our slowdown since the financial crisis has been more severe than in other developed nations. We rank third-last among the G7 — ahead of only Canada and Japan — and we’re falling further behind our competitors: France, Germany and the USA. This matters, because increased productivity is the key to improving living standards. Without it, businesses underperform, we fall behind competitors and, ultimately, our ability to increase pay, invest in public services and improve living standards is limited.

Government sets the agenda for productivity in areas like skills, infrastructure and research and development. We’ve seen encouraging moves in the Budget and an industrial strategy white paper, but it could be years, if not decades, before we see results, and we can’t wait that long.

Fortunately, research exists that points to a quicker solution. Analysis by the Productivity Leadership Group, supported by McKinsey, shows that although the UK has many innovative businesses, all sectors of the economy also have a ‘long tail’ of those with productivity levels far below their potential.