Technology in the UK could help boost productivity.
The Cisco Productivity Index has found that the UK could add £140 billion in GDP, growing its economy by 7.5%, if all UK boroughs achieved their benchmark productivity levels.
If only the core UK cities hit their potential productivity, this could add approximately £18 billion a year, equivalent to 1% of national GDP.
The study, developed in partnership with Oxford Economics, provides a local authority level view of productivity throughout the UK. Drawing on data from 391 local authority areas, covering multiple contributing areas — from road transport and employment to IT capital and academic qualifications — the Index identifies how productive each area is relative to its industrial benchmark.
It removes the effect local industries have on a region’s productivity to signify its potential. And, is the first first study of productivity at a regional level, aiming to identify key trends and local solutions to increasing national productivity.
“Technology has the potential to have the same multiplying effect in regions, as it does in industry; it is the greatest lever we have to grow productivity, whether in the way it improves the efficacy of an organisation or the employability of individuals. This Index shows that there is a huge opportunity for the UK, if we collectively address local productivity levels,” explains Scot Gardner, chief executive, Cisco UK & Ireland. “Our goal in creating this index is to provide practical solutions to the UK’s productivity puzzle at a local level.”
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Productivity standstill
The UK is currently the eight largest economy in the world. However, productivity — a key determinant of pay and living standards — has been at a relative standstill since 2008.
“Productivity is a black spot for the UK economy. Nationally, our productivity levels are among the worst in the G7—but this report reveals the troubling disparities at a much more local level,” added Sam Moore, managing director, Economic Consultancy, Oxford Economics.
“By controlling for each area’s industrial mix, we seek to shed light on other factors that might be associated with these disparities, from levels of investment in technology and R&D to local infrastructure and connectivity. In some cases, these factors may be easier for policymakers to influence than an area’s industrial makeup.”
Key findings include:
London dominance
• Wandsworth is the UK’s top-performing local area — with 65% higher productivity than its industrial benchmark; and
• London boroughs dominate the strongest performing areas — with 15 of the top 20 boroughs coming from the capital.
Core cities
• All 10 of the UK’s core cities fell short of their benchmark levels of productivity — with six cities falling short by over 10%; and
• Of the UK’s core cities, Bristol is the highest performing — achieving 98% of its industrial productivity benchmark.
Intra-regional disparity
• Wide intra-regional disparities exist across closely geographically situated areas — the range between the highest and lowest performing London and South Eastern boroughs is over 50 points; and
• The narrowest intra-regional disparities are found in areas with lower scores on the Index — local areas in Wales and the North East all fall short of their benchmark level.
Factors affecting productivity
• The Index shows that there is no single dominant factor that determines a region’s productivity: in each area there are a unique combination of contributing factors.
• However, the index highlights a positive correlation between the following four areas and increased productivity: technology, people, business structure and innovation, geography and physical infrastructure.
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Technology: the UK’s productivity saviour
“As a nation, we’ve already had a lost decade of productivity growth and we cannot afford to have another one. The UK’s ambition should be to become the most productive nation in the world, not an also-ran,” said Tony Danker, chief executive, Be the Business.
“We already have some of the most competitive companies in the world — businesses that couple best in class management with exploiting technology to its fullest potential. This provides a roadmap for where our efforts should be directed. Becoming more competitive has the power to transform lives, by bringing higher paid more fulfilling jobs to more people. The Cisco Productivity Index gives businesses and government leaders in every part of the country greater clarity on the need to do more together to improve the productivity of our communities. It’s now time to stop debating the puzzle and get to implementing solutions we know can make a difference.”
