Top economists visited Birmingham City Business School this month to discuss the UK’s productivity levels and boosting business output.
Former government advisor Vicky Pryce, chief economist at the Chartered Institute of Personal Development, Mark Beatson and the Midlands Economic Forum’s Paul Forrest, spoke during an event at the Curzon Building on Thursday 17 September.
Productivity, which is often calculated based on the economic output per hour, per person has reached its slowest rate of growth for two decades.
Speaking to a room of business leaders and economists the trio discussed how productivity had changed since the industrial revolution.
Mark Beatson, who opened the event, said UK productivity had been at a standstill for seven years and its influence on wages was a major factor behind the cost of living crisis.
He said the country needed more dynamism in its businesses, as above average productivity amongst business overall was noted in only 45 per cent of business surveys. This suggested that high productivity groupings were needed to take advantage of emerging technologies and opportunities.
Ms Pryce spoke in her dual roles as Chief Economist for the Centre of Economic and Business Research and as Visiting Professor at the University.
She said that there was a close relationship between government investment and investment in business and that cuts to local government spending could lie behind the productivity crisis.
“We have concerns now about investment into skills, research and development, machinery, people, universities, further education and technology. Without this vital investment future productivity growth will remain challenging.”
“The UK’s productivity problem is deep-rooted and long-term. The solutions need to be equally holistic and far-reaching requiring patience and perseverance from policy makers as well as from business.
“Investment is important but so too is making best use of the assets we already have – capital, knowledge, ideas and skills and ensuring sources of knowledge and skills are properly connected within local economies is critical.
“However, a lot of this also depends on what happens within the business – it is not an easy area for policy makers or business support agencies to reach.
“You have to have productivity growth if you want to continue to grow, without that you just can’t have growth and this is the point we are now at.”
Both Ms Pryce and Mr Beatson also talked about the growing importance of design-led companies driven by creativity which could allow better engagement with customers and increase domestic and international market success.
Paul Forrest was the day’s final speaker and looked at the economic situation in the West Midlands and believes manufacturing is the region’s great strength.
Mr Forrest said the West Midlands contribution to UK productivity should not be underrated and needed to be understood but relied on future investment in infrastructure – both physical and digital.
He said the Midlands Economic Forum had estimated that the real contribution of manufacturing amounted as close to 38 per cent but that it could be as high as around 50 per cent of our economy.
“On this basis the region has to push to gain its fair share of investment with government to redress the imbalance of the past three decades.”