Financial services sector dragging down UK productivity


UK productivity is amongst the best in the world in some areas such as food & drink manufacturing and professional services but is dragged down by the poor showing of vital sectors such as financial services.

A report by the Sector Skills Development Agency (SSDA) has found that while Britain's overall productivity is still well below that of the average of the Group of Seven leading industrial countries, this is largely due to substantial variations in performance between sectors.

The study, covering 16 countries, showed that Britain led the world in the manufacture of furniture, jewellery, musical instruments, toys and miscellaneous products and recycling and ranked second only to Canada in the manufacture of food and drink.

In transport it ranked second only to the United States, while in agriculture, hunting forestry and fishing it ranked second to Japan. But much weaker performance emerged in other vital sectors of the economy. Most surprisingly, the financial services sector ranked only 14th, with productivity levels some 32 per cent worse than average, a figure that was worse only in Canada.

According to the report, this poor performance can partly be explained by the sector having "too many managers displacing other productive inputs" and too many "people described as managers when they are not actually performing a managerial function".

The wholesale, retail and car repairs sector also propped up the bottom of the table, with poor training, management and IT blamed for its dismal performance.

"Although the UK is the world's fourth largest economy, and is currently enjoying a period of unprecedented stability, this research has highlighted there are areas of weakness and concern," said Professor Mike Campbell, the SSDA's Director of Strategy and Research.

"Productivity variations do exist across different sectors of the economy reinforcing the position that no single skills strategy can be applied to all sectors. "Unless solutions can be found, the UK could find itself overtaken by its economic rivals in the global market and unable to fulfil the promise of its businesses and public services and the aspirations of individuals."