National Productivity Week at ESCoE: Rebecca Riley reflects

Why do some UK firms thrive while others struggle to keep up? During National Productivity Week in January, The Productivity Institute, the Royal Economic Society, King’s College London, and the Economic Statistics Centre of Excellence (ESCoE) gathered at King’s to tackle this crucial question. With insights from top researchers and industry experts, the event explored why productivity varies so widely between firms.

In this blog, ESCoE Director and event chair Rebecca Riley shares key takeaways from the event, reflects on the importance of National Productivity Week, and highlights ESCoE’s groundbreaking research on productivity.

National Productivity Week

Britain has a long history of poor productivity growth when compared to similar sized economies, at least dating back to the 2008 Global Financial Crisis. Average annual growth in labour productivity was around 2% in the decade before the financial crisis but has averaged less than 0.5% since.

National Productivity Week (27 – 31 January 2025) from The Productivity Institute is a campaign to raise awareness of the importance of productivity and its impact on the economy. This year’s focused on businesses supporting the productivity agenda, providing them with insights on how to make strategic productivity gains, such as developing their people, making better use of emerging technologies including AI, and deploying finance and investment.

Unlocking productivity: Bridging the gap between UK firms

The event featured presentations based on recent work by the Office for National Statistics (ONS), The Productivity Institute, and the ScaleUp Institute.

The discussion focused on firms and how they differ in terms of productivity performance. We explored these differences, including why they matter and what can be done about them. It was a broad overview of the topic, spanning statistical aspects, international comparisons, analysis of specific firms and the policy implications.

• Sumit Dey-Chowdhury (ONS) presented data on business dynamism, job creation, and productivity distribution. He covered the topic from a micro perspective, reflecting work led by his ONS colleague Tom Wickersham. He highlighted the decline in job reallocation rates and the important role of business dynamism in diagnosing macroeconomic productivity challenges. He also called for further discussions on how policies could address inefficiencies in business dynamism and resource allocation.
• Bridget Kauma (University of Sussex and The Productivity Institute) compared productivity differences between the UK and France, focusing on the impact of economic density and regional disparities. Her analysis highlighted the importance of internationally comparable business microdata. She also showed how the UK’s productivity problem is compounded by its sharp London-region divide, a phenomenon that is not mirrored in France.
• Josh Robson (the ScaleUp Institute) took a different approach by discussing the challenges and barriers faced by high-growth firms in the UK. He emphasised how scaling businesses is key to boosting UK productivity but called for a focus on removing barriers. He also spoke about the importance of regional support, access to capital, and talent for scaling businesses. Like Bridget, he referenced the London-region divide in the UK, emphasising how growth policies should target high-potential firms across all regions, not just in the capital.
• Louise Hellem (Confederation of British Industry) provided a business and policy perspective on productivity issues. She stressed the need for a stable policy environment, a clear UK strategy and removing investment barriers to drive productivity growth. She also spoke about the importance of ensuring tech adoption and diffusion across all firms to help close the productivity gap. She highlighted the need for a balanced approach, supporting both SMEs and larger firms.
• The panel discussion focused on policy, covering regional disparities in productivity across the UK and emphasising the importance of local growth strategies. We also examined industrial strategy, debating whether efforts should target specific sectors. Another key discussion point centred on identifying the most relevant metrics and dimensions to assess progress effectively.

We may not have fully ‘unlocked’ the complex issue of productivity, but the presentations and panel discussion gave plenty of food for thought. Productivity growth is a complex issue with multiple contributing factors. It requires a coordinated approach, with policies across different areas (including education, innovation and infrastructure) working together effectively.

Economic measurement is at the heart of the issue; strong data is crucial for understanding the productivity puzzle, designing effective solutions and ultimately improving the economic wellbeing of the nation.

ESCoE’s research programme

Understanding the productivity puzzle and the global slowdown of productivity growth is central to ESCoE’s research agenda. Together with partners including the UK Office for National Statistics, The Productivity Institute, King’s Business School and many others, we are improving productivity measurement across a range of sectors to inform policymaking. Productivity was also a key focus of our 2024 Conference on Economic Measurement.

Public sector productivity measurement

One key area of focus is on improving measurement of public sector productivity. Accurate measures of the value generated by public services are vital to understanding developed economies and inform policy and spending on public health, education and defence. However, measurement in these sectors can be more of a challenge than in the private sector. This is because outputs are harder to define, especially when they are provided free to users. ESCoE research in this area is informing ONS work to review and improve public sector productivity measurement.

Developing the Management and Expectations Survey

Another important area of ESCoE’s productivity work is the Management and Expectations Survey. This links closely with this year’s National Productivity Week’s focus on businesses supporting the productivity agenda.

Working closely with the UK Office for National Statistics (ONS), ESCoE researchers created the survey to analyse business management practices and growth performance. This is the largest ever survey of management capabilities in Great Britain, providing critical insight on the relationship between how businesses are managed and their productivity. This work is informing industrial strategy, public sector productivity measurement and Government support schemes. It is also helping policymakers to better understand firms’ resilience to economic shocks.

Any views expressed are solely those of the author(s) and so cannot be taken to represent those of The Productivity Institute, ESCoE, its partner institutions or the Office for National Statistics.