The UK Government has set out its ambition to build back better after the pandemic and address regional inequalities through ‘levelling up’ economic growth and opportunity. Prime Minister Boris Johnson has also highlighted the need for the UK to transition to a high-wage, high-skill economy that relies less on immigration to address skill and labour shortages. But whether these ambitions can be realised will ultimately depend on increased economy-wide productivity growth.

The Government’s current Plan for Growth focuses on key areas such as infrastructure, innovation and skills, but lacks a strategy and policies to support economy-wide improvements to firm-level productivity. 

The paper highlights evidence showing why investment in technology alone is unlikely to lead to increased productivity without complementary investment in management capability and workforce development. Employees need to be managed effectively and develop new skills if business investment in technology is to be optimised to boost productivity and wages. 

The paper argues there is the need for a clear strategy to boost firm-level productivity with investment and changes to policy required at a national, regional and sectoral level.

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