UK productivity falling ‘below potential’

Business Secretary Sajid Javid
Business Secretary Sajid Javid

Productivity is one of the few areas of the economy where Britain is struggling and is “well below” its potential, the Government has said.

Business Secretary Sajid Javid said it now takes a UK worker five days to produce what a German worker can deliver in four.

Boosting productivity was the “economic challenge of our age”, he said in a speech in Birmingham building on measures announced in this week’s Budget.

Mr Javid named three areas where the Government was taking action - transport, planning and education.

Road congestion was so bad that by 2040, more than 100 million working days could be lost to traffic jams, he said.

Around £100 billion will be invested in infrastructure over the next five years, while a decision on a new airport runway in the South East will be made by the end of the year.

Measures will also be taken to boost skills, because too many young people were missing out, said Mr Javid, who confirmed the changes to planning laws in a bid to make sure more houses are built.

Matching the productivity of the US would raise economic output by 31 per cent, equating to around £21,000 a year for every household in the UK, the Government said.

“Our plan for productivity is clear - we’ll get Britain moving, we’ll get Britain building and we’ll get Britain learning.”

Shabana Mahmood, shadow Chief Secretary to the Treasury, said: “Today’s document is a patchwork of existing schemes rather than a substantial reform to boost skills, business growth and wages.

“Working people need delivery, not more empty promises.

“Instead of investing in the infrastructure and skills we need, the Government are dithering on airports, have cancelled the electrification of key rail lines and have rebadged existing training as apprenticeships.”

British Retail Confederation (BRC) director general, Helen Dickinson, said: “There has been a long-standing need to understand why the UK lags behind other major economies in terms of productivity and that is why the BRC welcomes the plan.”