Sharing prosperity for a more productive future

Brexit has shone a light on how different parts of the UK are sharing in its prosperity and it's not flattering. We take a closer look at why prosperity matters and how a more equitable position will drive business and economic benefits.

By Alison McGregor

CEO HSBC Scotland

According to the UK Prosperity Index, the top 10 most prosperous areas of the UK are almost entirely based in the South of England whilst, with the exception of Barking & Dagenham, the 10 least prosperous are found in The Midlands, Wales, Scotland and the North of England1.

By failing to deliver on prosperity, the UK is storing up problems associated with poor life chances – health, wellbeing, education and skills. These are the building blocks of a modern society, of productivity and sustained economic growth.

Prosperity – a productivity driver

With the most productive area of the UK now almost three times more productive than the least and nine out of ten UK cities performing below the European average2, there are huge opportunities to boost productivity. Enhanced productivity will drive stronger economic growth, higher living standards and greater competiveness.

The CBI is exploring these themes across the UK. The initial findings of the research carried out with McKinsey reveal that differences in regional productivity are reflected in regional economic performance.

Whilst Northern Ireland appears the most prosperous of the devolved UK regions, beating Wales and Scotland, there are deeper issues within the regions themselves. For example, although London's productivity sits 60 per cent higher than that of Northern Ireland, there is huge variation of gross value added (GVA) per hour within the capital, with the most productive areas twice as productive as the lowest3.

Enhanced productivity will drive stronger economic growth, higher living standards and greater competiveness.

Factors impacting productivity

Determining what drives differences in productivity is key to finding solutions. The CBI research points to a number of factors

  • Education
  • Infrastructure
  • Business practices and expertise.

We know that sector clusters can also help, by concentrating skills, attracting talent and building efficient supply chains.

Closing the gap

It stands to reason that closing the productivity gap within and between regions is in our national interest. Authority leaders in areas such as the northeast of England and Yorkshire, where prosperity is relatively evenly distributed and average productivity is mid-table, are working hard to push the economic power of the north of England. Investment in infrastructure and enhanced connectivity within the north and between it and the rest of the UK will boost regional productivity, shared prosperity and better quality of life.

Brexit presents us with both a challenge and opportunity to enhance UK productivity and shared prosperity, becoming globally competitive and pursuing robust economic growth.

Brexit presents us with both a challenge and opportunity to enhance UK productivity and shared prosperity, becoming globally competitive and pursuing robust economic growth.

The right stimulus

To tackle the productivity puzzle and support growth across the UK, it is important to push the right economic levers: producing a 'ready for work' employee base needs business, government and education to create a beneficial pathway for people to find jobs; fast-tracking start-up firms requires empowerment and good business practices; opening up international trade corridors makes them more productive; and good infrastructure widens the labour market.

Whatever the specific interventions, we must find a way to empower businesses to improve their productivity, whilst also addressing localised gaps. Many businesses would put such solutions at the heart of a post-Brexit strategy for growth – and, if they improve the way the UK shares its prosperity, they should be on the government agenda too.

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