The government should set itself a “productivity target” to boost UK growth and hold itself accountable for the performance of the economy, the Institute of Chartered Accountants in England and Wales (ICAEW) has argued.
In the latest report into the productivity puzzle, the number crunchers said the government should be aiming to boost productivity by between two and three per cent a year.
Productivity measures the total value of goods and services produced in an economy per every hour of work. Before the crisis productivity was increasing by around three per cent a year, but has stagnated since.
The ICAEW said productivity is a “key metric of future prosperity” and wants a clear target so that the government can track its performance and be held accountable for any shortcomings.
“The chancellor’s long-term economic plan will be nothing but a hollow pipedream if productivity is not improved,” said Michael Izza, chief executive of the ICAEW.
“It is time that the government adopts a national productivity target which brings the UK back up to speed.”
Productivity isn’t everything, but in the long run it is almost everything
– Paul Krugman, economist
The accountants called for the government to create a national productivity council made up of business experts to provide guidance on how to meet the annual target, once it is in place. The body also said that the government must focus on infrastructure projects and improve physical and digital connections between Britain and the rest of the world to help boost exports.
Earlier this week, top MPs attacked the government for “political dithering” over the failure to move forward with expansion of air capacity in the south east of England. The transport select committee, which backs the Airports Commission’s recommendation to build a third runway at Heathrow, said the government’s failure to set out a timetable to get spades in the ground represented a “squandered opportunity.”