Unlocking regional productivity could add £208bn to the UK economy

UNLOCKING higher regional productivity could add £208bn to the UK economy over the next decade, new research has suggested.

The study by the CBI, launched at the Manufacturing Technology Centre at Ansty Park, said the increase was equivalent to an economy that was 10% bigger than it would be otherwise.

The business organisation said if stakeholders committed to the approach then it would help to tackle inequality at a time of real concerns about living standards and wages.

It said productivity was vital for long-term, sustainable economic growth as it is the foundation for prosperity.

However, while some parts of the UK have seen world-class productivity gains, too many cities, towns and regions have been left behind, limiting opportunities for millions of families across the country.

Unlocking Regional Growth draws on special access to Office for National Statistics data to identify the four main drivers of regional productivity differences across the UK.

These are:
•    Educational attainment of young people at 16 and skills
•    Transport links that widen access to labour
•    Improved management practices
•    Higher proportion of firms that innovate and export.

In last month’s Autumn Statement Chancellor Philip Hammond set out to tackle regional imbalances by pursuing an industrial strategy fuelled by infrastructure and innovation spending.

Now the CBI has calculated the potential gain to the UK economy if each local area can increase its productivity at the same rate as the top performer in their respective region or nation.

The size of the prize is huge – £208bn to the UK’s nominal gross value added over the next decade – roughly equivalent to the combined GVA of Wales, Scotland and Northern Ireland.

This would lead to more jobs and higher standards of living right across the UK.

To achieve this goal, the CBI said businesses and policymakers had to work together to place increasing productivity and economic growth at the heart of further devolution efforts.

Sir John Peace, chairman of the Midlands Engine said: “I am heartened to read the recommendations from today’s report which reflects our thinking at the Midlands Engine.

“We have a golden opportunity to unlock higher productivity and growth across the regions and nations of the UK.  But the fact that the most productive area of the UK is now almost three times more productive than the least area is deeply concerning, and reflects a lack of investment and attention given to our regions by successive governments over many decades.  

“Investing in our nations’ future must be core to future government policy.”

He said central to these aims must be a focus on improving skills, innovation, R&D and transport infrastructure.  By focusing on these, a fairer, more balanced UK would result and one which could take its rightful place in the international marketplace post Brexit.

However, he said even with these challenges, the Midlands was thriving with businesses and people flocking to the region.

“I’m confident with more support, we can continue to thrive outside of the EU and it is vital that the regions are central to the Government’s industrial strategy.  The wheels for this are already in motion, with the Midlands Engine at the forefront,” he added.