Lord O'Neill, formerly the bank Economist who coined the term BRICS to characterise the main emergent markets of the millennium period, and then went to the Lords as one of Osborne's Treasury Team to be minister for the chimerical 'Northern Powerhouse' and then had the sense to resign, is now participating [as a judge] in a competition to find somebody - presumably an 'Economist' - who can re-work the data on input-output ratios in the services sector of the British economy with a view to making the data on productivity look a bit better than they do.
Almost 80% of the economy falls into the broad category of services, from financial services to waste disposal. While it is broadly possible to work out the costs of running a factory: maintaining it, depreciating the buildings and machinery, employing the staff, buying materials, warehousing incoming and outgoing commodities etc, and to set that figure against the prices received for the output, it is much harder to do this for a bank or even a hairdressing salon with the many ancillary 'treatments' that many such establishments offer. Thus the 'productivity' of manufacturing activities can superficially be assessed with more apparent assurance that applies to services.
However, I have shown a few times in this blog that the higher 'productivity' that is reported in French and German firms, relative to British equivalents, is largely related to the incorporation of intellectual property within the prices that the firms can charge. In the many cases where firms in continental countries have the huge advantage of being recognised as the national leader in the field, they have the capability to charge premium prices and still get the demands of the public in preference to cheaper alien products. This applies to coffee grinders and to banks, as much as to car makers and washing machine suppliers.
Of course, the Germans have the advantage of the brilliant meister system of operation within companies, just as American forms benefit from massive intellectual property and a strong work ethic among the workforce [far exceeding UK norms], but many of the aspects that cause higher productivity in this country rather than that are intangible. I hope that Lord O'Neill will winkle out someone who can really provide the way to an answer; but I will not hold my breath.
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