As the contest for our country’s next Prime Minister chunters on, it’s important the victor projects a vision for a post-Brexit Britain beyond bold tax cuts and populist spending pledges. Implementing an effective programme to tackle the UK’s productivity crisis would secure them a legacy their predecessor never had.
UK productivity is falling. Since 2008 productivity growth has been half that of France, less than a third of that in Germany, and less than a fifth of that in the US. UK productivity is now nine per cent below Italy, 22 per cent lower than the US and France, and 25 per cent less than Germany.
Yet the driving factors behind the country’s faltering productivity are less obvious. The labour market has many positive attributes. Unemployment, for example, is at its lowest level since 1974, while employment is at a record 76.1 per cent. And despite the emergence of the so-called ‘gig-economy’ and an increase in unskilled and insecure work, the actual quality of work in the UK compares favourably by international standards. The labour market also shows high levels of flexibility with the UK ranking 8th out of 140 countries in the World Economic Forum’s measure.
