Productivity in the UK is set to rise by 10.7%, according to a study commissioned by the International Festival for Business (IFB 2016).
Over the last five years the trend has seen slow productivity and disposable income growth – however economists at Oxford Economics, the economic forecasters, are predicting a dramatic turnaround with both indicators improving significantly from 2015 to 2020.
Productivity will rise by a total of 10.7%, driving real personal disposable incomes to rise by a total of 12.4%.
Over the last five years productivity growth was 3.2% in total – around 0.6% per year – and disposable income to 2.7% in total, or 0.5% per year.
‘Beyond the City’, which was commissioned by IFB to better understand the national and international economic landscape, also predicts that 1.3m new jobs will be created over the next five years as the country’s international competitiveness and exports improve.
Despite this the rate of employment growth will reduce by half relative to the last five years, when 2.5m jobs were created.
The study analysed the performance of the UK economy and its local economies beyond London with a focus on the manufacturing, energy and environment, professional services and digital and creative sectors.
The report was launched, 24 June at London Stock Exchange to mark ‘one year out’ from the second UK IFB, which returns to Liverpool between June and July 2016.
The event will bring together thousands of businesses for three weeks of networking and deal-making.
The study also revealed:
- 530,000 new ‘knowledge economy’ jobs are forecast be created over the next five years: 330,000 in professional services and 200,000 in digital and creative.
- Watford will see the biggest growth in jobs by 2020 – rising by almost 9% in total.
- Manufacturing productivity will rise by 15.5% in total over the next 5 years.
- Rising productivity will raise the UK’s international competitiveness, particularly in manufacturing which will see a 35% rise in the value of its exports.
- Wages will grow nationally but fastest in the South East, with Wokingham in Berkshire expected to see a 12.1% total rise by 2020.
- Britain’s second cities – including Manchester (3.8%), Birmingham (2.5%), and Liverpool (2.6%) – will experience faster employment growth than Paris (1.7%), Berlin (1%) and Tokyo (-0.2%) over the next five years.
Festival chairman Max Steinberg said: “It’s clear the economic recovery is about to turn another corner – with rising productivity driving a surge in disposable incomes and in our international competitiveness.
“London is central to our economy, but this report makes it clear that Britain has productive and creative hotspots beyond the City that will make significant contributions to the country’s economy over the next five years.
“At next year’s IFB festival we will celebrate Britain’s collective economic strengths, showcasing our capabilities to the world for three weeks of events and deal making, and this report makes it clear we have a great deal to offer.
“As a testament to the rise in confidence of British business, IFB 2016 today announces HSBC will become a main partner and DLA Piper, Heathrow, PwC, Siemens and Virgin Trains will become Festival Supporters.”
John Cridland, director-general of the Confederation of British Industry (CBI), said: “There’s no doubt that ramping up British exports and business investment is critical to our long-term growth.
“Next year’s International Festival of Business will be a fantastic opportunity for the UK to attract business, trade and investment from around the world.”
Small Business, Industry and Enterprise Minister Anna Soubry says the UK is already the number one destination in Europe for attracting foreign investment and describes the 2016 International Festival of Business will be an important opportunity to build on that.”
IFB has also announced that Jude Kelly, artistic director of the Southbank Centre, London, is appointed IFB creative director for 2016.
Caption: Max Steinberg, IFB, and Anna Soubry, minister for small business, enterprise and industry. Image copyright LSE