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Cash Flow & Forecasting Finance General Insolvency Rescue, Restructuring & Recovery Turnaround

Are there positives hidden in the UK’s decline in productivity?

There has been much worry about the UK’s continued weak productivity and the fact that it continued to decline in the last three months of 2014.
While this continues to be a concern in terms of UK business competitiveness globally Daily Telegraph Business columnist Allister Heath last week suggested that “at least some of the UK’s productivity shortfall was a good thing”.
Why? Because the UK’s success in reducing the numbers of unemployed has distorted the picture, somewhat exaggerating the productivity problem. His argument is that large numbers of those now back in work were “low productivity workers” and that this has dragged down the average productivity per worker.
He also argues that more needs to be done to improve productivity by improving the skills of these workers with vocational training and education.
Further, he argues, to improve productivity requires dramatic improvement in the UK’s infrastructure, not by increasing government capital spending on such projects as the HS2 rail projects but by encouraging private sector investment.
Certainly the UK needs to increase capacity, to improve efficiency and to grow its export markets.
“We need to unleash the forces of entrepreneurship and competition on all kinds of capital projects, from transport to energy”, he says.
Do you agree with him?

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Banks, Lenders & Investors Business Development & Marketing Finance General Turnaround

Self employment – are we sowing the seeds of a catastrophe?

Self employment accounts for almost two thirds of the new jobs created in the UK since the 2008 financial crisis according to the Office for National Statistics (ONS).
Effectively these are micro businesses and many of the 4.6 million people in this category, according to the ONS, are older people, often offering “white collar” consulting and skilled services.
This may be keeping people off the unemployment register and the Government, naturally, attributes it to entrepreneurial spirit and more people wanting to be their own boss. It is also hoping that many of these micro businesses will grow and be significant providers of future new jobs.
However, there is some evidence that most micro business owners are working longer hours than employed staff, for lower remuneration and that many will have to continue working well beyond retirement age.
This development raises two important concerns. Firstly, how are these businesses being funded while the statistics indicate that banks and other finance providers are not lending to micro and small businesses? Are they depleting personal savings or growing consumer debt? And how will they fund retirement?
Secondly, if the earnings from self employment are lower than they for those in direct employment, notwithstanding the impact on the economy due to a reduction in spending, is this change in employment patterns sowing the seeds of a yet unforeseen catastrophe?