Landmark investment to address the UK’s productivity puzzle

Cardiff University is joining forces with eight other institutions to help improve the UK’s productivity.

Academics at Cardiff Business School are involved in the £32m Productivity Institute, which will help policy and business leaders across the UK understand how to improve productivity and living standards as the economy begins to recover from the impact of Covid-19.

It is being funded by £26m from the Economic and Social Research Council (ESRC) as well as £6m from lead institution Alliance Manchester Business School and its partner institutions over five years.

Professor Andrew Henley of Cardiff Business School said: “The UK’s low productivity problem has been one of the most enduring economic and business challenges over the past decade. This is a ‘levelling-up’ challenge that has a very pronounced regional character. In Wales low productivity has hindered the closing of our prosperity gap since at least the establishment of devolved government.

While UK productivity (the amount of production per worker) has historically risen over time, it is lower now than it was at the onset of the financial crisis in 2008. This is despite the fact the economy grew until Covid-19 reached the UK – something dubbed Britain’s ‘productivity puzzle’.

Addressing this puzzle could mean better jobs, higher living standards and the country becoming richer on a per-person basis.

The Productivity Institute is being funded by the ESRC as part of its largest single investment into social sciences research. ESRC is part of UK Research and Innovation, which is principally funded by the Department for Business, Energy & Industrial Strategy (BEIS).