We welcome the UK Government’s productivity review and recent call for evidence on the firm level factors that most impact UK productivity. In our response we discuss our experience as an SME and highlight some areas that we believe the UK Government should consider when measuring productivity. Specifically, we recommend that the UK Government:
- Monitors productivity using both financial and non-financial measurements: This would give a more holistic view of the UK’s economy, and may help to capture benefits which are currently hidden within productivity measures. For example, by broadening productivity measures to capture health and welfare, it would be possible to better measure the impact of low wage jobs for some target groups, such as the UK’s growing elderly population;
- Compares productivity and competition environments in the UK with other economies that have low barriers to entry for businesses, such as the US, to elucidate the impact of competition on productivity; and
- Considers the role of ultra-high growth start-ups on the UK’s productivity: Analysis in this area could include on whether these firms continue to be successful in the medium-long term and whether successful fast-growing companies remain in the UK economy in the medium-long term, rather than being moved overseas (for example through acquisition).