Productivity gap "worrying" says Chancellor

THE Chancellor Philip Hammond made a £23bn commitment to close the worrying “productivity gap” which sees the UK lagging behind other major economies including the USA, Germany, France and even Italy.

The cash will be ploughed into a newly formed Productivity Investment Fund over the next five years.

“Raising productivity is essential if we are to deliver a higher wages and a higher standard of living in this economy,” Hammond said.

He also pledged to double the UK’s export finance capacity and support John Lewis chairman Sir Charlie Mayfield’s financially based management skills initiative across businesses.

Hammond also he was putting £400m into venture capital funds to help prevent small high-tech businesses in the UK being sold off before growing to scale and unlock £1bn of finance to help such firms grow.

Another major investment was announced in research & development, which tied into Mr Hammond’s productivity agenda. The Chancellor promised to contribute £2bn a year to R&D.  

Andrew Coticelli head of tax at Deloitte, said:”Research and development is a key driver for economic growth and productivity. Today’s announcement of an additional £4.7bn in R&D funding by 2021/22 is likely to cement the UK’s status as one of the most competitive nations globally in terms of government support for R&D. The lifecycle of innovation, from R&D to commercialisation, has been put at the core of the UK’s agenda.

“Historically, UK universities have been more successful than SMEs at accessing EU grants. Any increase in the amount of funding available at a time of uncertainty over future availability, combined with improvements to the awareness and simplicity of this funding will be welcome news for all.