Hunt made the comments on economics podcast The Rest is Money, where he said: “Here’s the interesting thing about productivity.
“We are about 15% less productive than Germany, not because Germans work harder than us, it’s because they invest a lot more in plant and machinery around every single worker, so they are able to physically produce more – and they can, of course, be paid more as a result of that.”
The chancellor then pointed out that the UK has grown faster than Germany since 2010.
“We actually have a tremendously strong start-up culture in this country. We’ve developed over that period a technology industry that is double the size of Germany’s, three times the size of France’s.
“We are very good in this country at innovation, start-ups, getting things off the ground. If we could have that start-up entrepreneurialism and the productivity that they have in Germany and America, we could really smash it.
This he added, was the reason for the capital allowances tax cut, which supports investment in plant and machinery for profitable companies.
“That’s the way I think we can close the productivity gap,” Hunt said.
Charles Jarrold, chief executive of the BPIF told Printweek that Print was generally a good example of this British entrepreneurialism, with mainly SME businesses run by owners close to the action.
He said: “The real challenge – and opportunity – is in raising productivity.
“It’s pretty clear that a significant driver of this is lower business investment, and that’s where government policy can help. We need to see a continued level playing field, consistent support for investment in equipment and skills, and government making sure that their policies don’t make the business environment even harder.”
Ricoh UK’s national sales director, Simon Isaacs, likewise sees productivity as a problem within the sector.
He pointed to Ricoh UK research which showed that over half (52%) of print sector businesses are still running on legacy or manual systems, despite the fact that 77% of the industry reported wanting to automate or improve its processes.
He said: “For organisations within the UK professional print sector, this is not about replacing people but rather listening to employees who are calling out for innovation to boost productivity.
“Neglecting to invest in innovative technologies risks decreased productivity, possible loss of employees and hinders their chances of further growth, and leveraging process automation holds the key.”
While not mentioned by Hunt in the clip, the skills of both employees and leaders are likewise vital to productivity.
According to research from the Chartered Institute of Personnel Development (CIPD), SMEs are particularly prone to lower productivity as a result of poor people management.
The government’s own Business Productivity Review in 2019 found: “UK SMEs compare particularly unfavourably internationally on people management, which is the factor most correlated to productivity.
“Leadership and management practices therefore represent one of the greatest opportunities for firm-level productivity growth in the UK.”
The CIPD also found that because owner-managers of small firms were frequently time- and resource-poor, they struggled to invest in business improvement activities even if they recognised the necessity.
Jarrold said: “We are in an industry that’s both skills intensive and investment intensive – ongoing investment in both is vital to remaining competitive and improving productivity.
“A stable and supportive business environment helps companies have the confidence they need to make those decisions.”
