Skip to content

We know how to solve this

What explains this poor record on productivity? It is not that leading British
firms are less productive than their competitors overseas. It is that we have
a ‘long tail’ of low-productivity firms.77 As figure 3.4 shows, the UK has a small
proportion of businesses with high productivity, of over £100,000 per worker; and
a very much larger number earning under £50,000 per worker. This dispersion
is considerably greater in the UK than in other OECD countries.78 The ‘long tail’
of low-productivity businesses is particularly marked geographically. There are
high- and low-productivity firms in every area of the country; but on average
productivity is much higher in London and the South East than elsewhere (see
figure 3.5). This is partly because of the different sectors that predominate
in different regional economies, but it is not explained by it: there is wide
geographical divergence in productivity even between firms in the same sectors.

Declare unilateral free trade. That is what increases firm level productivity.

2 thoughts on “We know how to solve this”

  1. there is wide geographical divergence in productivity even between firms in the same sectors

    Let’s take a look at one sector, manufacturing. Northern Foods makes low-margin foodstuffs (frozen pizzas, biscuits) somewhere up north. GlaxoSmithKline make high-margin pharmaceuticals, mostly in the south.

    Same applies in many other fields: the high value-added stuff is done down south, the grunt-work is done up north. Presumably that accounts for the geographical divergence between firms within the same sector?

  2. @ Andrew M
    Glaxo makes pharmaceuticals in Barnard Castle, Irvine in Ayreshire, Montrose and Ulverston (and three sites in the south). The Beecham consumer goods are made down south. So the high-value is more up north than down south, possibly because skills and quality control are vital.

Leave a Reply

Your email address will not be published. Required fields are marked *