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CEP election analysis

Productivity and Business Policies

UK productivity stagnated after the Great Recession of 2008-09 and remains about 15 percent below historical trends. This 'productivity puzzle' is due to a mixture of cyclical and structural effects - the fall is not entirely permanent; and has led to a widening of the longstanding gap with other countries. UK GDP per hour is now about 17 percent below the G7 average. Chronically low investment especially in infrastructure and innovation, poor management and weak intermediate skills can explain this. Government policy on tax, regulation, business support and funding for science and research can create help businesses invest and become more productive. The main parties emphasise the importance of a long term framework for investment and innovation, with a focus on support for small firms (particularly in accessing finance and expertise), key sectors and technologies. Some differences are emerging on corporate tax, regulation and corporate governance.

Isabelle Roland and Anna Valero

18 March 2015     Paper Number CEPEA021

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This CEP election analysis is published under the centre's Growth programme.