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Britain’s once-dominant corporate sectors that powered national productivity growth are now lagging behind global competitors, according to a new report from Boston Consulting Group (BCG). The consultancy warns that the UK government must adopt a sharper, more targeted industrial strategy to reverse the country’s long-standing productivity slowdown.
BCG’s analysis shows a stark shift in the drivers of UK productivity growth. Between 1997 and 2007, manufacturing, information and communications, and financial services were responsible for 84% of positive productivity gains. However, from 2019 to 2024, those same sectors accounted for just 34%, highlighting a significant decline in performance. The report also found that the weakest firms in the UK now produce less per worker, adjusted for inflation, than they did 30 years ago—an alarming indicator of structural inefficiency within parts of the economy.
To address the UK productivity crisis, BCG recommends encouraging “creative destruction,” allowing uncompetitive businesses to exit the market while supporting workers in transitioning to higher-growth industries. The consultancy argues that Britain’s industrial strategy should prioritize sectors with strong growth potential rather than attempting to lift all industries equally. A focused, disciplined approach would deliver stronger long-term economic growth.
The financial services sector, once a cornerstone of the British economy, has seen minimal productivity improvement since the global financial crisis nearly two decades ago. Meanwhile, manufacturing could benefit significantly from reforms that reduce energy costs, improving competitiveness. For information technology and communications firms, targeted support in workforce training, digital skills development, and innovation investment is essential.
Successive UK governments have pledged to improve productivity, and Prime Minister Keir Starmer has committed to planning reform and infrastructure investment. However, BCG’s findings suggest that deeper structural changes and sector-specific reforms are necessary to restore the UK’s global competitiveness and drive sustainable economic growth.
