Raising productivity 'is central long-term challenge'

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Raising the UK's productivity is a "central long-term challenge" for the economy and is key to increasing wages, the Government said.

Chancellor Philip Hammond told MPs that the UK lags behind other countries, with productivity levels 30% lower than in the United States, over 20% lower than in Germany and France, and 8% less than Italy.

In the "real world", it took a German worker four days to produce what a UK worker makes in five days, he said.

The Treasury said that if productivity was raised by 1% a year, within a decade it would add £240 billion to the UK economy - £9,000 for every household.

"The Government will continue to focus on driving up productivity and taking action to close the UK's productivity gap over the long term through promoting increased investment, particularly in innovation and infrastructure, a more flexible planning system, an open, trading economy and a skilled workforce," said a Treasury document.

A new National Productivity Investment Fund was announced, providing £23 billion between 2017/18 and 2021/22.

Sue Ferns, deputy general secretary of the Prospect union, said: "The negative impact of Brexit on the UK's economic outlook for the next few years appears to have finally focused minds in the Treasury with regards to the importance of raising productivity."

Ian Brinkley, of the Chartered Institute of Personnel and Development, said funds announced by the Chancellor aimed at improving the quality of management was a "crucial step forward" in cracking the UK's "productivity puzzle".

He added: "However, attempts to improve workplace productivity will continue to be undermined without fundamental changes to skills policy, particularly in relation to apprenticeships, lifelong learning and adult skills provision."