National Productivity Week 27th January 2025 | Visit Website

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the UK’s productivity problems.

Election 2024: A productivity plan

Productivity has to be at the core of the next Government’s agenda

To achieve this, the UK needs a broad-based and integrated set of policies. These policies should above all support business and public investment in skills, innovation, and the transition to a net-zero economy across all sectors, devolved nations, and regions in the UK. While there is still scope to grow the economy faster by increasing workforce participation and creating opportunities for older workers to keep working longer, as acknowledged in the parties’ manifestos, raising economic growth will be difficult without significantly increasing the productivity of our labour force.

Labour productivity, measured as GDP per hour worked, is currently on a slow growth trajectory of about 0.5 percent. In order to match the growth of the economy during the 2010s, productivity growth needs to be doubled to 1 percent. However, for us to afford the much needed public investments in the economy without having to raise taxes dramatically, productivity growth will need to climb to 1.5 to 2 percent. This is achievable, as the UK demonstrated during much of the 1980s, 1990s, and early 2000s.

A new Government should aim to realise another big acceleration in productivity, especially one that underpins inclusive growth to the benefit of all. The key issues to address, as laid out in The  Productivity Institute’s Productivity Agenda, are:

  • Countering the chronic underinvestment in business investment which has been weakening since the mid 1990s.
  • Where businesses, cities and regions are excelling at productivity, there needs to be greater diffusion of best practices and better leverage of cluster effects in city areas beyond London.
  • Britain needs to tackle its institutional fragmentation by improving communication between the public and private sectors and other groups. This fragmentation results in a lack of joined-up policies, often at a devolved nation or regional level.

The election manifestos, published in the second week of June 2024, sparsely recognise the importance of productivity, but they all identify key policy areas that could be impactful if fully implemented, properly funded, coordinated and committed for the long-term. The proof of their effectiveness will lie in the actual policy details revealed in the coming months.

For now, the Conservative Party manifesto presents policies that support innovation, infrastructure development, and regulatory reform, which are components of a broader industrial strategy even though such a strategy is not explicitly mentioned. The Liberal Democrats and the Labour Party both have dedicated sections in their manifestos outlining their industrial strategies, with a focus on providing businesses with certainty, fostering partnerships, and aligning policies with long-term growth and environmental goals.


  • Productivity Studies




B. van Ark, N. Pike (June 2024) Election 20024: A productivity plan for the next UK Government