Time running out to solve productivity puzzle, warns ACCA Scotland

The creation of a new £23bn National Productivity Fund in the Autumn Statement is an important step towards tackling the UK’s productivity puzzle, but urgent action is required as the economy braces itself for Brexit, according to the Association of Chartered Certified Accountants (ACCA) in Scotland.

Craig Vickery, head of ACCA Scotland, says that while Government action from Westminster to improve productivity is welcome, Holyrood will also have to think big to revive Scotland’s struggling private sector.

He said: “The productivity gap in the UK means that the average British worker produces in a week what a French or German worker produces in four days: and Scotland lags behind the rest of the UK by over 10 per cent. Yet while the temptation can be to look at the strong manufacturing base of those economies and look to emulate that, we should recognise that the UK is a world-leader as a service and knowledge economy. Scotland in particular possesses thriving financial, technological and innovation centres.

“When you look at the potential impact of vertical cloud computing or predictive analytics, for instance, you can envisage how industries could be transformed through radical efficiency savings which create time for added value, highly productive activities.”

Mr Vickery says that this means that Holyrood needs to focus on building digital skills as well as infrastructure: “Education is going to be vital to ensure that British workers are equipped with digital skills to compete in a global workplace where technology is playing an increasingly disruptive role. This requires both long-term investments such as continuing to support vocational training through initiatives such as the Apprenticeships Levy, but it also means being willing to invest in training programmes for existing workers so those gains can be gained in the short-term.

“In ACCA’s own Generation Next global survey of under-36s working in finance, 84 per cent saw the possibility of technology creating opportunity for higher value work, even if they could see the risks to low-level jobs.

“The finance professionals of the future are ambitious about the role of technology in boosting productivity, and government needs to recognise and support that as soon as possible.”

Mr Vickery added that the intention for the UK to leave the European Union by 2019 means that tackling the productivity puzzle is now an urgent priority.

He said: “The costs of Brexit to the UK economy are more profound than adding extra tariffs to exports or limiting the access of British business to the world’s largest trading bloc. The prospect of greater immigration limits and increased barriers to cross-national collaboration poses severe risks to some of the UK’s most dynamic and productive industries, from finance to technology.

“Scotland is 24 per cent behind Denmark – who the Scottish Government has targeted as a model - in productivity terms and unless favourable Brexit terms can be negotiated in terms of access to the single market then Scottish business will feel the pinch.

“The UK is in a strong position to compete globally in these sectors, whether in our out of the EU, but we have to start taking urgent action now to tackle the problems of productivity – and hopefully Scotland will see some of the benefits of the National Productivity Fund in the immediate future.”