Productivity remains an acute issue for the UK economy

Productivity remains an acute issue for the UK economy

Yael Selfin, head of macroeconomics at KPMG in the UK, comments on Philip Hammond’s speech today at the Conservative Party conference in Birmingham.

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Commenting on Philip Hammond’s speech today at the Conservative Party conference in Birmingham, Yael Selfin, head of macroeconomics at KPMG in the UK, said 

“The Chancellor put productivity at the top of his priority list in today’s speech naming it as an acute issue for the UK. Only Japan is behind the UK in terms of productivity among the G7, with UK’s private service sector, aside from finance, the main underperformers. There is no single remedy to address this but there are numerous factors that influence productivity and improving these could have a significant impact on the UK’s long-term economic performance prospects. 

“Economic analysis we carried out early this year, highlighted an important correlation between the strength of a country's education system and its economic potential.  Indeed the UK was deemed 'could do better' compared with its peers on education which means investment in the education system is one of the most effective levers the Chancellor can pull to boost the UK's long-term prosperity. Improving education and skills will give companies access to the workforce they need, and ensure our next generation can continue building a successful Britain. 

“Another area which would have a major impact on UK economic growth and wealth is investment in infrastructure. According to our analysis, the UK could see real benefits from investing and upgrading its transport infrastructure in particular. For instance better regional rail links would allow workers to travel to areas where there is demand for their skills. Added to this, more flexibility on housing such as rethinking tax penalties on buying and letting property would give families greater freedom to move to areas where employers are seeking staff.“

 

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