Friday, October 06, 2017

The Productivity Problem

Britain's productivity, which had been growing steadily under John Major and Tony Blair, dropped under Gordon Brown and has flatlined ever since.

This is a serious cause of concern - it is the main reason that real income growth has been sluggish and we cannot hope to be competitive or afford more money for schools and hospitals without tackling this.

No major political party can or should be complacent about the problem which has persisted during periods when all of them have been in office.

I doubt very much that there is any single "magic bullet" to solve poor productivity and it certainly should not be seen as being all the fault of workers or, for that matter, management.

One thing which is needed is more investment and innovation - which in turn means that you are most unlikely to solve the problem under any government which imposes higher corporation tax or otherwise applies penal taxation to business instead of rewarding those who do well.

We also need to look again at opportunities for investment and training.

And we should ask how much of a burden on productivity is caused by bureaucracy - to what extent are people less productive because they are spending lots of time filling in government or corporate forms and surveys?


Anonymous said...

Base rate at 0.25% for a decade and companies still wont invest, we are like a 3rd world country and it's only getting worse, but this is nothing wait till we leave Europe. Good job some of us can get an Irish passport.

Chris Whiteside said...

I's not quite that simple, though I agree with you that many companies need to invest and innovate more. We need to assure them that if they do they will be able to reap the rewards.

I voted Remain and if I were transported back to last year knowing everything I know today I would certainly still do so, but the voters have made a decision and we have to try to make it work.

We won't do that by wallowing in gloom or running down Britain.

Anonymous said...

A senior European politician recently observed of the British: “It was heroic of you in 1940 to stand on your own against your enemies; it is ridiculous in 2017 to stand on your own against your friends.”

Chris Whiteside said...

Not sure that's all that relevant to the specific issue of productivity.

I've already told you that I voted Remain and if transported back in time to June 2016 knowing what I know now I would do so again, so if you are saying you would have preferred a different outcome to the referendum, so would I.

But I also believe in democracy, we held a vote, we should honour the result. As I said, we now have to make it work - and I don't see Theresa May trying to "stand against" our neighbours in Europe. She has said again and again that we want a new form of partnership with them as a trading partner and ally, co-operating on Defence and Security issues.