Business time: how ready are UK firms for the decisive decade?

The UK is set for a decade of major change, with private sector firms in the front line. How ready are they for this change? What form should policy towards business take within a new economic strategy for the UK? This report is the first of a series on UK firms for the Economy 2030 Inquiry to address these questions. Private sector productivity is the key driver of longer-term improvements in living standards. UK performance in this regard is dire in two respects – levels and growth. These are a pervasive feature of the UK, present in most sectors of the economy. The gap between the best and worst firms is huge, but this problem is not especially bad in the UK when compared to other countries, nor getting any worse overall. Nor do UK firms appear to have suffered the same loss of dynamism as in other countries. Where they stand out, though, is in their low levels of investment and mediocre management. Increasing investment is necessary but must be wisely targeted, and will necessitate postponing consumption or increasing net imports.