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<p>The UK has a longstanding ‘productivity gap’ with its main competitors. This has
been exacerbated in recent years by weak productivity growth, commonly referred to
as the ‘productivity puzzle’.</p><p>The slowdown in UK productivity growth in the
last decade can largely be attributed to changes in the finance and manufacturing
sectors which saw an outsized fall in their productivity growth. Economic shocks and
pressures arising from the Financial Crisis and the Euro Area crisis also had a dampening
effect on productivity.</p><p>Productivity is the main driver of long-run economic
growth. The UK’s ability to improve living standards is almost entirely dependent
on its ability to raise productivity. In 2017 the Government published a document
on the Industrial Strategy that set out a long-term plan to boost productivity by
backing businesses to create good jobs and increase the earning power of people throughout
the UK with investment in skills, industries and infrastructure. The Government recently
published the Business Productivity Review in response to the Industrial Strategy’s
core priority of addressing the UK’s productivity issue.</p><p>Furthermore, the Industrial
Strategy Council – an independent, non-statutory advisory group comprised of leading
men and women from business, academia and civil society – was created to provide impartial
and unbiased evaluation of the Government’s progress in delivering the Industrial
Strategy. The Council published its success metrics on its website in Autumn 2019.</p>
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