11 August 2015
Practice Group(s):
Public Policy and
Law
Investment
Management, Hedge
Funds and
Alternative
Investments
Global Government
Solutions
"Wake up, England!"* - The UK’s 2015 Productivity
Plan
By Sean Donovan-Smith and Rodney Smyth
*The title usually given to a speech by the Prince of Wales (later King George V) on 5
December 1901, when just back from a tour of the British Empire, as the Empire’s
clarion call to England, the "mother country".
In July, the UK government published a paper, "Fixing the Foundations: Creating a more
prosperous nation" (H.M. Treasury, July 2015, Cm 9098). Its link title, “Productivity Plan”,
accurately describes the contents. So, the theme is that the UK "has a long-term
productivity problem" - "which has been made worse by the financial crisis". In response:
“…[the UK government's] ambition is that Britain [i.e., the UK] becomes the richest
of all the major economies by 2030".
Some ambition.
The document "sets out the government's vision to deliver that".
Back in 1901, the future King might have sympathised.
We will not summarise the policies. For UK readers, this would be unnecessary and for
others, of little interest. Nor will we comment further - this would stray into politics.
Rather, we believe our clients may be interested in the ambition, for (and we repeat) the
UK to be the world's richest large nation by 2030, and in the facts, figures and
arguments. As official documents go, it is a clear and interesting read.
Some UK facts and figures
The UK's negative productivity gap
• UK GDP per hour worked (2013) lower than
o USA: by 31%;
o Germany: by 28%;
o France: by 27%;
o G7 average (ex-UK): by 17%;
o Italy: by 9%.
…in a UK economy dominated by London
• Share of city areas (as defined by the OECD) in the national economy (2010)
o London: 28%;
o New York: 7%;
o Berlin: 5%;
"Wake up, England!" - the UK’s 2015 Productivity Plan
• although the same source also states:
o Tokyo: 32%;
o Paris: 31%.
Source: OECD, "Metropolitan eXplorer", October 2013.
… which also has the richest city district in the EU
• Range of GDP per inhabitant, as a percentage of the EU average, between the
"NUTS 2 areas" within each city ( defined by Eurostat)
o London: c.70 (poorest area)-c.320 (richest);
o Brussels: c.77-210;
o Berlin: c.82-195;
o Paris: c.52-175.
Source: Eurostat, online database.
… but UK total investment is on a par
• Share of investment in tangible (“physical”) and intangible (“knowledge”) assets as a
share of “adjusted market sector gross value added (GVA)”, 1995-2007
o UK: c.26%; - “knowledge” 44% greater than “physical”;
o France: c.25%;
o USA: c.25%.
…and UK broadband coverage is high
• UK superfast broadband geographical coverage and take-up - the highest of the 5
largest EU economies
…although UK literacy and numeracy lag
• England and Northern Ireland - in the bottom 4 OECD countries (as defined) for
literacy and numeracy skills among 16-24 year olds.
…and UK housebuilding has sharply declined
• UK land changing to “residential” use (housebuilding):
o 1990: c.7,200 ha. (c.17,800 acres);
o 2011: c.2,400 ha. (c.5,900 acres).
… as has UK roadbuilding
• Motorways built in France 1990/2015 (major highways): 2,700 miles;
• Length of the entire UK motorway network: less than 2,700 miles;
• Share of UK passenger journeys by distance: more than 85% by road.
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"Wake up, England!" - the UK’s 2015 Productivity Plan
…in a country where the railways have never been more popular in
peacetime
• Increase in rail passenger journeys in Great Britain (England, Wales and Scotland),
2005/15: 57% - and, since the mid-1990s, at "a rate far in excess of any other mode of
transport" (including cycling?).
Next steps
The paper is not out for consultation. It states settled government policy.
Clients interested in the UK government’s wealth-creating plans may wish to review the
full document.
Sources: unless stated, the statistics above have been produced by the UK government
and are reproduced here under the terms of the Open Government Licence v3.0.
Authors:
Sean Donovan-Smith
Sean.Donovan-Smith@klgates.com
+44.(0)20.7360.8202
Rodney Smyth
Rodney.Smyth@klgates.com
+44.(0).20.7360.8304
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