Although many reasons are put forward for the relatively low productivity levels in
the UK, including the educational system, the activities of trade unions, the high value of
the pound and low levels of research and development, the major reason given is lack of
investment. The McKinsey Report concluded that as far as capital productivity is concerned,
the UK performs better than France and Germany and not far behind the USA.
It would seem that the investment that does take place is used efficiently enough but that
there is not enough of it. Two major factors identified by the report which inhibit productivity
growth in the UK are the effects of regulations (which govern markets and
land use) and skill shortages.