A new report out today by the International Festival for Business 2016 and Oxford Economics says that British manufacturers are forecast to increase their productivity by 15.5% over the next five years, helping to increase the value of exports by 35%.
EEF welcomes the findings, saying they make a ‘powerful case’ for the Chancellor to help solve Britain’s productivity crisis by targeting Government support towards encouraging growth in high value manufacturing.
Paul Raynes, director of policy at EEF, commented: “British manufacturers are shown to be more productive than other parts of the economy and, as such, hold the key to improving the UK’s productivity puzzle.
“This report emphasises just why the Chancellor must focus his attention on areas that will deliver the biggest wins and prioritise support for sectors, such as manufacturing, that have a strong track record on productivity improvements.
“Manufacturing is projected to deliver 40% of Britain’s productivity gains over the next decade. In the past five years output per hour in manufacturing has grown four times faster, on average, than that across the whole economy.
“In the years running up to the financial crisis, UK manufacturers were increasing rates of productivity growth in line with the best in the world and, since 2007, the sector has remained ahead of most EU competitors, including Germany.
“We have a strong track record to build upon, which is why Government and business must work together to close the productivity gap and why investment in skills, science, research and infrastructure will be key.”
EEF is calling on the Government to work with business to improve productivity through policies based on three key principles:
The levelling up of performance between the strongest and weakest performing businesses:
- Permanently setting the Annual Investment Allowance at £250k
- Ensuring migration policy does not prevent companies accessing skilled employees from outside the EU
- Protecting funding for the critical Catapult network
A greater focus on the most productive sectors and reduction in barriers to growth:
- Maintaining internationally competitive R&D tax credits and an open approach to innovation engagement with EU partners
- Ensuring funding for Apprenticeships is maintained and channelled through a voucher system to put employers in the driving seat
- Implementing the recommendations of the Competition & Markets Authority to improve competition in business banking
Using proven areas of Government spending which spread good practice:
- Driving ahead with the road investment strategy and implementing the recommendation of the Davies Commission as soon as possible
- Committing to strategic planning for the UK’s infrastructure requirements beyond this Parliament
- Widening better regulation to include the tax and administration agenda
- Maintaining the breadth and stability of UKTI funding for export support.