PRODUCTIVITY FEBRUARY 2019
TACKLING BRITAIN’S
PRODUCTIVITY PUZZLE
Despite low unemployment and a growth in wages, the UK is still in a rut
when it comes to productivity, which is yet to recover since the financial
crisis of a decade ago. Solving this will require some creative thinking
BY JOHN EGERTON, OPERATIONS DIRECTOR, MACE GROUP
The UK economy is showing remarkable
resilience in the face of global financial
and political headwinds. Unemployment
is at its lowest level since 1975 and wage
growth has started to pick up. However,
Britain’s ‘productivity puzzle’ remains a
concern for policymakers. Despite a better than
expected recent improvement, productivity growth
is still lower than before the financial crisis of
a decade ago. It is a sign of how important the
government regards the issue that the Bank of
England’s chief economist, Andy Haldane, has
been appointed as the first chair of the Industrial
Strategy Council, tasked with shaping the
government’s approach to productivity policy.
Any improvement in UK productivity will rely
heavily on increasing the size of our manufacturing
sector. The 2018 State of the Nation report by
manufacturing trade body EEF found that,
although productivity growth in manufacturing
outperformed the rest of the economy in the two
decades up to 2014, the sector still lags behind
that of other major nations. Whilst some sectors
of manufacturing, such as Britain’s world-leading
chemical and pharmaceutical producers, are hugely
productive, others have struggled to invest and
innovate in recent years.
I believe government
support to help manufacturers
overcome these struggles, and
tackle the productivity puzzle,
is key to building a thriving
post-Brexit economy. And
that support needs to focus
on four issues – reforming
the planning system, backing
the development of Local
Industrial Strategies, investing
in transport and improving skill
levels across our country.
Digitisation and automation
are already changing the face
of the manufacturing sector,
creating the factories of the
future. The challenge for UK
policymakers over the coming
years is to promote conditions
that reflect this shift. The
planning system is one area
with room for improvement.
Recent years have witnessed
an understandable focus on
solving the housing crisis
and increasing the number of
new homes being developed.
However, we should not lose
sight of the role planning has
to play in supporting industrial
activity. With huge pressure
on local authorities to release
sufficient land to meet the
government’s ambitious
housebuilding targets, there
is a danger that industrial and
logistics sites are lost. This
would be short-sighted, and
government must do more
to ensure industrial investors
are able to develop sites with
easy access for employees,
customers and suppliers.
Local Industrial Strategies,
currently being developed
by a number of combined
authorities and Local Enterprise
Partnerships across the country
including those where Mace is
based, in the West Midlands,
provide an ideal platform
for local leaders to ensure
planning policy is allied
stock.adobe.com
Productivity is
firmly on the
government’s
agenda, says
John Eggerton
40 www.manufacturingmanagement.co.uk
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/www.manufacturingmanagement.co.uk