The G7 Productive Business Index compares the productivity of SMEs in G7 countries. It finds that UK businesses are under-indexing on performance, and investment and improvement in capabilities linked to productivity. However, small business leaders in the UK showed high confidence and a positive outlook, ranking fourth on confidence overall, despite a lack of activity across key capability areas including management skills, HR and operational efficiency.
Matching this confidence with activity and investment would have a sizeable impact on economic growth. If every small employing business were able to maintain 1% improvements over a five-year period, this would add £94 billion to the UK economy annually. That’s equivalent of over half the annual budget for NHS England.
UK businesses have much to learn from their G7 counterparts, which we explore below. You can also read the full report here.
By analysing data and examining key indicators, the report uncovered five areas where the UK can learn from the strengths of other G7 countries:
- Management and leadership: The UK rates highly its abilities in leadership and management but commits far less to developing it, ranking sixth or seventh on all questions regarding investment in management capabilities. For example, only one third (33%) of UK businesses have improved their skills in this area over last 12 months, compared to over half (54%) of US businesses.
- Technology adoption: UK business leaders believe in the importance of technology and digitisation. However, only 28% of UK businesses said operational software increased their digital readiness over the past 12 months compared to almost half (47%) of Italian firms.
- Innovation: UK businesses are confident in their ability to innovate, but fewer than a quarter (24%) seek to form relationships with external parties to drive innovation in the next 12 months, half as many as the US (48%).
- Training, development and HR: Businesses in the UK are the least likely to invest in HR systems and processes, with just 23% of respondents doing so in the last 12 months, compared to 37% of French firms.
- Operational efficiency: UK firms consider their operations to be as efficient as competitors but are the least likely to have introduced any new initiatives to measure and improve efficiency and productivity, sitting at the back of the G7 alongside Japan.
The G7 Productive Business Index also includes deep dives into each of the other G7 countries, as well as clear recommendations for the small business community, big business and government.
