Productivity is the efficiency comparison of inputs, such as labour and capital, which is used in an economy to produce outputs measured through GDP, where GDP is the market value of all the final goods and services produced and sold in that economy.
Not wishing to be an economist (joking aside, this would be my dream job if I were not a lawyer), I do not want to get hung up on technical phrases, which may or may not have a different meaning depending on the context within which it is being used or received. In my profession, which is the provision of legal services, efficiency is being able to evolve to deal with clients’ needs in a more responsive and resourceful manner.
The issue I have continually witnessed being on the coal face of business for a very long time is that UK PLC has not been able to improve productivity. There is no point focusing on the fact the UK is within the G7 (a group of leading economies), when the UK was the foremost leading economy by far, some one hundred years ago. It was called the “Workshop of the World” a phrase coined by Disraeli when the UK was quite literally the only economy that counted and was considered the “gold standard” in the world, yet now Britain has a currency which is no longer dominant when compared to the dollar and as a result of COVID-19, it seems that productivity within the UK will worsen, rather than improve.
I do not say this lightly as the only way to improve productivity is taking the old mantra of Tony Blair, back in the 1990’s when he said “education, education, education”, this combined with the mantra used by Bill Clinton who said “it is the economy stupid”, begs the question why have we not taken the opportunity to invest in R&D?
We have just had the autumn statement, and hopefully this will be the start of a boost to the lifeblood of UK PLC, which is SME businesses were recognised by the Chancellor, Jeremy Hunt, when he said it would be a “profound mistake” to cut the government’s research and development budget. He says funding will be protected, with an increase to £20bn by 2024-25. What is more important is that Jeremy Hunt has the ambition to turn the UK into “the world’s next Silicon Valley”. However, this can only be achieved by an increase in productivity. This means not just cutting tariffs to support business supply chains but also finding new and different strategies that rely on the fact that the UK is still one of the world leaders in education and innovation through its universities and when combined with “left behind areas”, it will help to grow clusters of new innovation centres within the UK. Let us see what new announcements in the spring budget bring as it needs to be more than warm words. It needs to be an adrenaline injection to boost UK PLC in order to achieve its desired and deserved outcomes.
