The UK – Near bottom of the league for productivity growth…?

Anthony Hilton’s article in the London Evening Standard dated 26th May 2015 posed some very interesting questions. Why is the UK’s (9%) productivity growth so low compared to countries like Germany (19%), USA(18%) & Japan (17%), Greece, Ireland, Spain all achieved 10%?

He manages to argue that poor data is not the reason. Instead,  he lists the following factors:

  • Management bonus schemes destroy UK’s appetite for risk and investment
  • UK tax system favours capital gain and not income and therefore UK management’s outlook is too short term
  • The final element is the UK has some of the most flexible labour laws. Counter to intuition, this is part of the problem, as making cuts is a lazy solution to problems. In other countries with tighter labour laws, management has to be more creative and invest their way out of problems.

Its a great article that I really enjoyed.

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