The UK’s stable economy and strong science base has helped it overtake Germany in productivity, the Department of Trade and Industry (DTI) has claimed.
According to the agency’s UK Productivity and Competitiveness Indicators, output per worker, a headline measure of productivity, has halved the gap with France since the mid-1990s and now closed the divide with Germany and Japan.
Meanwhile, Britain is the only country in the G7 to have maintained pace with US productivity over the last decade, trade and industry secretary Alan Johnson said.
“The report shows that our success is underpinned by the stable economic framework we have put in place - with low inflation and low interest rates,” the minister said.
“But it is clear that for business and government to respond to globalisation we need to do still more to raise our productivity. Our skills agenda and the newly expanded R&D tax credit will be especially important in tackling areas where the UK has historically been weak.”
The report suggests one of the UK’s chief strengths is its macro-economic stability in recent years, as well as its science base, both of which provide firm foundations for growth.
The UK also recorded a strong showing of high-level skills, particularly in science, engineering and technology, and its high rates of entrepreneurial activity and light regulatory framework in comparison to continental rivals also gave it an edge.
The report also highlights the UK’s competitive markets, noted for high levels of foreign investment and trade.
The study, however, left open some room for improvement, particularly on basic- and intermediate-level skills, where the country underperformed. It also cited boosting R&D expenditure and business investment as areas of concern.