If UK was a US State it would now be the poorest, says new productivity report
The UK needs to urgently design its strategic approach and take concrete steps to develop world-beating productivity to drive economic growth and raise living standards, according to new research by The Chartered Institute of Management Accountants (CIMA), the world’s largest body of management accountants.
Since the 2008 financial crisis, the UK economy has failed to return to its pre-crash rate of growth, a phenomenon that economists call the “productivity puzzle”.
The UK’s growth lags 15% behind its G7 peers the US and France. In addition, in its “Tackling the UK Productivity Puzzle” report, CIMA found that if the UK was a U.S. state, it would now be the poorest within the USA, further highlighting the UK’s long-standing productivity gap and failure to grow when compared to other major economies.
The report, which outlines 35 recommendations to help improve productivity in the UK, calls for the introduction of a national productivity strategy to replace the Government’s Plan for Growth to generate sustainable economic growth and drive real wage growth. It also supports existing calls for the creation of a Productivity Commission in the UK that focuses on actions to tackle this systemic issue and go much further than the recently launched Productivity Institute.
It says a UK Productivity Commission should be set up as an independent research and advisory body, similarly to the Bank of England or Office of Budget Responsibility, to make research on productivity more tangible for businesses and hold the Government accountable for delivering its productivity strategy.
According to a survey of finance professionals for the report, the main barriers to improving productivity in UK businesses are down to a mismatch between skills and market need. Many businesses report that they are currently struggling to match available skills to those they need to improve their performance.
The top reported barriers include businesses having difficulty in hiring more employees with the right skills (18%), a lack of adequate existing skills within the organisation (16%), and having inadequate management skills and practices (12%).
Andrew Harding, FCMA, CGMA, Chief Executive of Management Accounting at CIMA, added: “We must put a greater emphasis on investing in skills to help generate economic growth and tackle the long-term challenges this crisis has only exacerbated such as our low productivity, high dependency on lower-skilled workers, regional imbalance, and weak social mobility. The UK can’t afford to play the waiting game on this issue.”
