A DIGITAL SOLUTION? But there is hope in what might seem a bleak picture. Not least is the belief that the nation’s pioneering technology sector will provide at least some of the answers to the enduring puzzle. When Chancellor of the


Exchequer Rishi Sunak opened London Tech Week in June, he described high-performance computers and cloud capabilities as vital for powering technologies of the future and said this would be critical for the UK’s productivity, prosperity and innovation. Later the same day, the


“ The UK’s economic future, jobs, wage levels, prosperity, national security, cost of living, productivity, ability to compete globally and our geopolitical standing in the world are all reliant on continued and growing success in digital technology.”


CHRIS PHILP, MINISTER FOR TECH AND THE DIGITAL ECONOMY


Government unveiled its UK Digital Strategy policy paper aimed at giving a further boost to an industry that, last year, saw a tech unicorn created in Britain every 11.5 days, according to the Dealroom business tracker – by far the most in Europe. “The UK’s economic future,


the Bennett Institute. “If the picture is different in


different places, then a logical conclusion may be that differing conditions in different places require different types of policy response, rather than assuming that ‘one size fits all’.” Some of these regional


differences are stark. London’s labour productivity is about 30% higher than the UK average and about 50% more than that in Yorkshire and the East Midlands. And, according to the Confederation of British Industry (CBI), last year Scotland lagged behind other parts of the UK and international competitors in nine of the 13 productivity indicators for which comparable figures were available. Ian Stewart, Deloitte’s Chief Economist in the UK, says that the current problems confronting the global economy – where inflation is eating into consumer spending power, with weakening demand, higher interest rates, corporate cost- cutting and uncertainty inhibiting growth – is compounded in the UK “by a history of weak productivity relative to other rich nations”. He adds: “There’s no consensus


on why UK productivity lags. The list of suspects is lengthy, though inadequate investment, vocational skills, infrastructure and growth capital, tend to get most of the blame.”


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jobs, wage levels, prosperity, national security, cost of living, productivity, ability to compete globally and our geopolitical standing in the world are all reliant on continued and growing success in digital technology,” Minister for Tech and the Digital Economy Chris Philp said at the policy launch. He added that the Government


would work with schools, universities, further education providers and businesses to deliver the digital skills that the real economy needs “in a framework that is understandable and recognisable”. And he said: “It is also vital


that the best and brightest from around the world can quickly and easily come to the UK. In addition to the comprehensive suite of visa routes already available to digital businesses, we are introducing the new High Potential Individual and Scale-up visas, so that UK digital businesses can easily recruit from anywhere in the world.” However, John Van Reenen,


Professor of Economics at the London School of Economics (LSE), stressed in a recent discussion with the Institute for Fiscal Studies that the answer to the productivity puzzle did not lie solely with technology. “I think part of the diagnosis of


the problem in the UK has been that we have failed to make long-run investments in the kind of key things that have been found to be major drivers of productivity,” he said.


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