British corporate sectors that once drove national productivity growth have fallen behind the global leaders and the government’s strategy for improvement must be hard-edged, the Boston Consulting Group, a consultancy, said on Monday.
Policymakers should encourage “creative destruction” of firms that are barely surviving and help workers to move to higher-growth areas, BCG said in a report.
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Successive British governments have sought to fix the country’s weak productivity record. Prime Minister Keir Starmer has promised to reform planning rules and invest more in infrastructure.
BCG said in its report:
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- Businesses in manufacturing, information and communications and financial services accounted for 84% of positive productivity growth in Britain between 1997 and 2007, but only 34% in 2019-2024.
- The U.K.’s industrial strategy should be focused on successful areas, have “hard edges and be relentlessly focused, rather than trying to lift growth for all sectors.”
- The weakest firms now produce less per worker than they did 30 years ago, after adjusting for inflation.
- The financial services sector has seen little improvement since the global financial crisis almost two decades ago.
- Reforms that lower energy prices would help manufacturing.
- Specific help for IT and communications firms should be in areas such as training, digital skills and innovation.
(Writing by William Schomberg)
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Source:
Reuters
