Welcome, Guest Your Favourites (0)

The UK is about 30 per cent less productive than Germany and America. James Hurley reports, The Times.

Average salaries would rise by more than £8,500 a year if British workers were as productive as their American counterparts, a report has claimed.

The nation’s hourly output would need to rise by 32 per cent to match the productivity performance of the United States, which if achieved in January would have meant average weekly earnings would have been £164 higher.

The study, by the campaign group, the Taxpayers’ Alliance, calls for radical and contentious changes in 12 policy areas to achieve the “huge gains” on offer and “give the nation a pay rise”.

These include calls to ease planning restrictions, scrap stamp duty, reduce taxes for both the lowest and highest-paid workers, and devolving more tax powers to the regions.

Productivity, or output per hour, is seen as key to raising economic prospects and living standards because improving it allows companies to produce more goods or services with fewer workers or hours worked. In turn, this means they can afford to pay higher wages.

Britain is about 30 per cent less productive than both Germany and America, and last year the government pledged to tackle the problem by championing industries and boosting regions.

The Taxpayers’ Alliance also called for capital gains tax to be scrapped which it claimed would encourage entrepreneurship and investment by speeding up the “reallocation of assets”, for example by encouraging founders of promising small businesses to sell out to professional managers more readily.

Other ideas include measures to make it harder for Britain's tens of thousands of so called “zombie firms”, those that can afford their debt repayments, but not to invest in growth, to secure finance so their staff, premises and equipment can ultimately be picked up by more productive organisations.

The group argued that being outside the European Union’s customs union following Brexit may boost productivity. It said the customs union, an agreement not to charge trade duties on goods traded within the area, but to charge a common levy on goods entering from outside, gives advantages to European businesses “at the expense of consumers” and more productive companies.

John O’Connell, chief executive of the Taxpayers’ Alliance, said: “As Britain prepares to leave the EU, we need to ensure that our country is ready to meet the risks and take the opportunities that lie ahead.

“Our nation’s productivity is lagging behind other G7 countries such as America, and we are simply not living up to our potential.

“By scrapping burdensome regulations and lowering the tax burden on families and businesses, the UK could significantly increase productivity and give everyone a much-deserved pay rise.”

He added: “Now is the time for the government to take bold action.”