Raising productivity is essential for the ‘high wage, high skill economy we want’, Chancellor Philip Hammond has declared in his Autumn Statement 2016.
The Chancellor looks to settle the economy after an uncertain political and economic year that saw sterling drop, political instability and economic turbulence.
In order to rebalance the economy, Hammond announced a National Productivity Investment Fund of £23 billion to be spent on innovation and infrastructure over the next five years, as part of a plan to ‘invest today for the economy of the future’.
Hammond stated the productivity gap is well known, but shocking nonetheless as the UK lags the US and Germany by some 30 percentage points. The UK also lags France by over 20 points and Italy by eight.
The Chancellor claimed it takes a German worker four days to produce what a UK worker can make in five; which means, in turn, that too many British workers work longer hours for lower pay than their counterparts.
Economic growth in the UK has been too concentrated in London and the South East, the Chancellor said, adding that we must drive up the productivity performance of our regional cities.
He announced the publication of a strategy for addressing productivity barriers in the Northern Powerhouse; and give the go-ahead to a programme of major roads schemes in the North.
Funds for local enterprise partnerships (LEPs) between local authorities and businesses were also announced.
An allocation of £1.8 billion from the Local Growth Fund to the English regions was presented: £556 million to Local Enterprise Partnerships in the North of England, £542 million to the Midlands and East of England, and £683 million to LEPs in the South West, South East and London.
Lee Biggins, founder and managing director of CV-Library comments, ‘With investments being made in the UK’s house building, transport infrastructure and science sectors, we should see job creation boost in these areas, bringing about new opportunities for workers all over the UK.
‘Furthermore, the increase in the National Living Wage brings positive news to many workers across the nation and it is good to see that the government recognises the need to raise pay in order to boost productivity and ensure that our country is keeping up with some of our European counterparts.’