Reading the U.K. government Spring Budget 2017 report (HM Treasury, HC1025, March 2017) one sentence stood out for me by a mile: “Raising productivity growth sustainably remains the central long-term economic challenge facing the U.K.”
Of course this comment could and does apply to any of the G7 countries and in fact to most if not all advanced economies.In the notes of the budget report there is reference to a quarterly bulletin published by the Office for National Statistics.
This “international comparison of U.K. productivity (ICP)” is interesting reading. The data suggests that as a result of the financial crisis the U.K. suffered a drop in productivity that has hit the country harder than many other of the G7. Of course other data tells us that productivity has been in the doldrums for most advanced economies for the last 20 years, so his news is just heaping more oil on to the fire.
So at a macro level we have big challenges.
If we look instead at a micro level and look at how firms perform, we again see some interesting and perhaps conflicting data. There is data that reports industry and/or corporate profitability, that seems to ebb and flow over time perhaps in unison to an economic cycle, but overall tend to grow rather well. But at the individual level of the firm, we see some dire news. Many surveys and productivity studies suggests thing like the following:
My point of view: using the metrics of the goods economy does not reflect the improvements in a service economy. Still, many sectors in a service economy have limited opportunities for growth