The productivity problem is one of the biggest threats to the UK’s future
If the summer of 2018 was remembered by one adjective, surely “hot” is a top contender.
Be it the weather, sporting contests, or the latest twists and turns in Westminster, it’s certainly brought some heated discussions and blood-boiling moments.
And talking of turning up the temperature, it’s nearly 55 years since former Prime Minister Harold Wilson made his famous speech to the Labour party where he reflected on the pace of change and its implications for business.
It was here that Wilson said that a new Britain would need to be forged in the “white heat” of a scientific revolution. Warning that there was no room for Luddites, he called for the country to embrace technology to ensure Britain’s future standing in the world.
Brexit discussions are not taking a summer holiday, so policymakers have once more been contemplating the UK economy’s long-term prosperity well beyond our scheduled EU exit in March 2019.
As with Wilson half a century ago, there’s a well-rehearsed mantra about seizing the new opportunities that technology is affording us to guarantee a bright economic future.
And it is a maxim that’s still right.
Technology is rapidly changing the global business environment out there and challenging established business models. Britain’s businesses need to utilise technology if they are to remain relevant to their customers and continue to grow.
But when we think about our future prosperity, we may find that many of the questions and answers lie very much in the present.
For example, many agree that the productivity puzzle poses far more serious risks to our future than Brexit.
Related: What impact is Brexit uncertainty having on the UK economy?
The UK has a long-standing productivity gap compared to many of its international competitors, including the majority of the G7 countries. In 2016, output per hour worked in the UK was a staggering 16.3 per cent below the average for the rest of the G7 advanced economies.
Productivity has been a problem for the UK long before the emergence of Brexit. In fact, since the 2007-08 financial crisis, productivity growth in the UK has been slower than most other developed economies.
So, what needs to change?
Clearly, technology remains important. The availability of funding, particularly for small businesses, is also key to economic growth and national productivity.
But there is a less feted, but equally important, resource of knowledge and expertise that already exists across the UK economy. And this is the business support infrastructure, which small firms look to for guidance on a daily basis.
You may associate business support with a government portal, a price comparison website, or an app on your phone.
But while these sources of information are certainly providing a new channel of easily accessible and affordable content for businesses, the overwhelming majority still seek face-to-face advice. Indeed, regular surveys still show that accountants are one of the most popular sources of advice, with solicitors and lawyers often following close behind.
Why? It makes sense to seek advice from those who understand your business.
Many business owners have professional advisers whom they meet and consult with on a regular basis – even when their questions and concerns fall well out of their adviser’s area of technical expertise, because they trust them to know where to look.
Joining the dots
Professional advisers of all disciplines play a vital role in utilising their own networks to put the right support in front of their clients. For example, small accountancy practices up and down the UK retain networks with those who are experts in funding, technology, employment law, and more.
It is both their expertise and networks that encourage businesses to invest, innovate, and grow.
A recent ACCA research report called Growing Globally revealed that 91 per cent of surveyed small and medium sized accounting practices have clients engaged in international activity, giving them a wealth of expertise and a support network. Ultimately this helps small businesses at all stages of their journey as they go global.
Re-energising the workforce
When thinking about how we solve the UK’s productivity problem, we need to look beyond money and technology, and ensure that we also harness the insights of those people who know our businesses and economy best.
The government’s recent Productivity Review found that, for too long, new and innovative policymaking has neglected to think about ways in which our business support landscape can be re-energised.
Understanding how those already providing advice and support can help develop new growth opportunities for businesses should not be seen as an afterthought, but central to any long-term strategy. It is their insights that may well hold the key ingredient towards creating scorching growth across the economy for years to come.
Source: City A.M.