How can the UK overcome its productivity challenges?

Posted on 3 Apr 2018 by Jonny Williamson

Productivity is a core indicator to measure the success of a national economy; Stephen Kelly (Sage’s CEO) hosted a breakfast in the Shard, London Bridge, to discuss what it takes to help Britain’s economy become more productive.

Stephen Kelly hosted a breakfast in the Shard to discuss what it takes to help Britain’s economy overcome productivity challenges – image courtesy of The Manufacturer.

Stephen Kelly started the roundtable discussion with a striking first comment, looking down on London from the 17th floor of the Shard: “More than 50% of the businesses in London deploy Sage software.”

And he added that Sage focuses with its software solutions especially on the needs of UK’s SMEs because they are the backbone of every national economy.

Studies have proven, Kelly said, that SMEs have created 73% of all new jobs in the UK since 2010. Therefore, Sage feels an enormous responsibility to help especially small and medium businesses increase their productivity.

Kelly said: “We have a strong vision on Britain, which is underpinned by productivity. And there are three main factors when it comes to making UK manufacturing set for the future: digital Britain, smart Britain and Britain & diversity.

“We as a company are very passionate when it comes to investigating this productivity issue and I think it is central for a distinct vision on the UK’s future prosperity.”

Especially SMEs worldwide experience significant productivity barriers, Kelly said. To make the world economy’s productivity restraint more graphic, Sage developed an online ‘productivity tracker’ counting the lost GDP productivity per second.

Huge gap between most and least productive regions

Sage has also worked out a report with the innovations foundation ‘Nesta’ which reveals the stark inequality of opportunity for small businesses. Not just between North and South or urban and rural, but between sectors, and within regions in the UK themselves.

The report has shown, so Kelly, that the most productive part in the UK, the city of London, is in total 26 times more productive than the UK’s least productive part, West Somerset.

“And we also found that the main productivity barriers – as you would expect – are digital skills, digital infrastructure, sectorial strengths; all those factors affected the most productive and the least productive companies.

“We have to acknowledge the UK’s slightly ‘sluggish’ productivity is about 29% lower than in France. We also found in our research that definitely not one size fits all; we really need to tie bound between industry, academia, and government to help businesses.”

The three most important economic levers 

Kelly is convinced that Britain could become the most digital nation in the world, with the best digital infrastructure and people with the most advanced digital skills.

The second important lever which could help Britain’s economy become more productive lies in the country’s multi-ethnic background, so Kelly. Sage as a company mirrors the success of an inclusive working environment exemplarily.

“People from around 27 nations work for our company. I know what I am talking about when I suggest promoting the UK as the most inclusive nation for talented skills. We want Britain to be an international talent magnet.

“This will have a huge impact in terms of productivity boost for the nation’s fantastic engineers coming from India, China, the EU or the US, who spend their time here contributing to our economy.

“The third point is Smart Britain. Now is the right time for us to think about how to set up the best education system in the world.

“We need the skills that come through universities and schools to make sure that Britain becomes the best nation in the world, with the best education system,” Kelly added.

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