The UK is experiencing a shift in small business productivity, revealing an unexpected equalization trend across regions. This change primarily results from significant productivity drops in traditionally strong areas, contrasting with improvements in less productive regions.
- London, East of England, and the South East witness notable declines, while areas like East Midlands and Yorkshire show productivity gains.
- Overall UK productivity saw a broad-based decline in 2023, affecting most industries and regions, as revealed by Xero.
- The construction industry remains the UK’s most productive, yet education and training lag behind.
- International comparisons highlight UK hospitality’s superior performance over Australian and New Zealand counterparts.
The UK is witnessing a noteworthy trend in small business productivity, which is highlighted by a shift towards equalization across various regions. This emerging pattern is largely because of significant declines in productivity in historically productive regions such as London (-2.5%), the East of England (-6.5%), and the South East (-5.5%). In contrast, regions that previously lagged behind, like the East Midlands (+9.7%) and Yorkshire and the Humber (+7.4%), have shown notable improvements.
Data drawn from over 240,000 Xero small business customers indicates that this equalization could contribute to more equitable wages and living standards. However, an overall increase in UK productivity would further solidify these gains. Alex von Schirmeister from Xero emphasized the importance of holistic productivity improvements across every UK region and industry.
In 2023, a downward trend in national productivity was recorded across all industries and regions. This underscores the necessity for government measures that bolster productivity at a broader scale. Despite these challenges, some sectors defied the trend, such as hospitality, which saw a modest rise of 2.5%.
When comparing international productivity levels, Britain’s hospitality sector outperformed those in Australia and New Zealand. This difference might stem from disparate workforce structures, particularly the varying proportions of temporary migrant workers in the hospitality industry of these nations.
The UK’s journey towards regional productivity parity reflects both concerning declines and promising gains, with future growth tied to widespread strategic enhancements.
