Productivity has been exceptionally weak since 2007, and reviving it is essential to sustain growth and living standards. Fiscal decentralisation and greater infrastructure investment, better matching of skills to jobs and more rapid exit of non-viable businesses would raise innovation and productivity, and would make growth more inclusive.
Source: OECD June 2016 Economic Outlook database; OECD, Income Distribution and Poverty database; and OECD Secretariat calculations from EU-SILC – preliminary results.
“Productivity Plan”, released by the government in July 2015, covers a wide range of areas, including the tax regime for businesses, skills, science and innovation, digital infrastructure, investment and trade.
C. Patterson, A. Şahin, G. Topa and G. Violante (2016), “Working Hard in the Wrong Place: A Mismatch-Based Explanation to the UK Productivity Puzzle”, Federal Reserve Bank of New York Staff Reports, No. 757, January.
E. Giovannetti and C. Piga, (2014), "Private and External Benefits from Investment in Intangible Assets", BIS Research Paper No. 203, December.
The Office for Budget Responsibility was created in 2010 to provide independent and authoritative analysis of the UK’s public finances. It is one of a growing number of official independent fiscal watchdogs around the world. It has five main roles: 1) economic and fiscal forecasting; 2) evaluating performance against targets; 3) sustainability and balance sheet analysis; 4) evaluation of fiscal risks; 5) scrutinising tax and welfare policy costing.