The UK’s productivity challenge: people, firms, and places

The Productivity Agenda: Chapter 1

How can the UK reverse its poor productivity performance? The Productivity Agenda examines coordinated actions under the three pillars of people, places and firms to tackle the challenge:

• Chronic underinvestment in the economy
• Inadequate diffusion of productivity-enhancing practices between firms and places
• Institutional fragmentation and lack of joined-up policies.

Even doubling the current productivity growth rate from 0.5% to 1% a year over the next 12 years will only be sufficient to achieve the same rate of GDP growth as in the past decade. There are also persistent and relatively large gaps in regional productivity in the UK which have hardly reduced over the past ten to 15 years.

The UK needs to develop an integrated range of pro-productivity policies and commit to them for the long-term. They need to co-ordinated vertically between national, devolved nations, regional and local governments.

The paper also includes a number of policy implications.

Authors: Bart van Ark (The University of Manchester), Mary O’Mahony (King’s College London)