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UK productivity and policy

Despite a reversal of the trend of a century of low productivity from 1997 up to the financial crisis, UK growth has lagged far behind the US and its European comparators. Even after recovery from the 2008 crisis, productivity has flatlined at pre-crisis levels despite full employment.

We look to the cause of this "productivity puzzle" and combining the programme's 20-year findings on drivers of productivity with evidence from leading experts and stakeholders, set up two Growth Commissions and whose reports lay out policy remedies for sustainable long-term growth.

Our follow-on work on industrial policy explores challenges raised in these reports such as easing and targeting access to investment finance to innovative SMEs, reducing the tail of poorly performing firms by improving management practices, and improving universities' commercialisation of research and the diffusion of existing technologies.

While causes of the weakness of UK productivity growth pre-date the shocks of the financial crisis and the Brexit referendum result, the programme has also projected the additional impacts of different Brexit scenarios on the dynamic effects of reductions in productivity, (the trade and fiscal effects are tackled by the Trade programme).

These include decreases in product market competition and loss of benefits of innovation spillovers from multinationals and more productive foreign-owned firms some of which will move operations from the UK.



UK productivity and policy publications

Philippe Aghion, Terra Allas, Timothy Besley, John Browne, Francesco Caselli, Richard Davies, Richard Lambert, Rachel Lomax, Stephen Machin, G.I.P. Ottaviano, Christopher Pissarides, Isabelle Roland, Xavier Rolet, N Stern and Anna Valero

2 February 2017

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