Boosting productivity in the United Kingdom’s service sectors
The United Kingdom has been among the most affected OECD economies by the COVID-19
crisis, reflecting the high share of services in output and its integration in the
world economy. Productivity growth in the United Kingdom has consistently underperformed
relative to expectations and was more disappointing than in most other OECD economies
since at least the global financial crisis. Sluggish productivity growth in the service
sectors was the main factor behind this weak performance. Raising productivity will
help to sustain employment and wages but will require a broad range of policies. Keeping
low barriers to trade and competition in the UK service sectors will create a supportive
environment for strong productivity performance. Prioritising digital infrastructure
in the allocation of the planned increase in public investment is expected to bring
large productivity dividends. Reviewing the system of support to small firms in the
light of the COVID-19 crisis will help to re-prioritise resources towards young innovative
firms. Further increasing public spending on training to develop the digital skills
of low-qualified workers, which have been particularly affected by the COVID-19 crisis,
will be a double-dividend policy, boosting productivity and lowering inequality.
Published on November 23, 2020
In series:OECD Economics Department Working Papersview more titles