Productivity
Britain could get £83bn boost if regions halved productivity gaps

Boosting UK Productivity: Closing Regional Gaps
Recent studies have shown that Britain could significantly enhance its economy by £83bn if regional productivity gaps were halved. Currently, only London and the South East surpass the national productivity average, while areas such as Wales, the East Midlands, and Yorkshire and the Humber lag behind as the lowest-productivity regions.
If the 10 most underperforming regions could bridge just half of their productivity gaps to reach the UK average, the country’s GDP would see a 4% increase, as reported by PwC.
Small businesses play a crucial role in the economy, with employees from these enterprises accounting for 99.9% of all business workers. However, British output per worker falls short by 10%-15% compared to countries like Germany, France, and Sweden, and more than 30% behind the United States.
Matching Germany’s average productivity alone could inject an additional £180bn into the UK economy annually.
PwC emphasizes the importance of investing in staff training programs, particularly in digital skills, to boost productivity. Additionally, the upcoming Government is urged to prioritize investments in transport infrastructure to further support economic growth.
John Hawksworth, PwC’s chief economist, highlighted, “A 1% increase in skills is associated with a 2% increase in productivity in a local area.”
Over the past decade, Britain has experienced a stagnation in productivity growth, with an average increase of just 0.6% per year since the 2008 financial crisis, compared to 2% annually before the recession. This shortfall is attributed to low levels of investment, R&D spending, and a significant portion of companies and workers with inadequate productivity and skills, stated Alex Tuckett, senior economist at PwC.
Recent political proposals, such as the Labour Party’s plan to nationalize broadband and provide free access, aim to boost UK productivity by £59bn. While this move has received criticism from the City and telecom operators, some, like London mayoral candidate Rory Stewart, have shown support.
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