OECD Economic Surveys: United Kingdom

English
Frequency
Every 18 months
ISSN: 
1999-0502 (online)
ISSN: 
1995-3445 (print)
http://dx.doi.org/10.1787/19990502
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OECD’s periodic surveys of the British economy. Each edition surveys the major challenges faced by the country, evaluates the short-term outlook, and makes specific policy recommendations. Special chapters take a more detailed look at specific challenges. Extensive statistical information is included in charts and graphs.

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OECD Economic Surveys: United Kingdom 2017

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Author(s):
OECD
17 Oct 2017
Pages:
144
ISBN:
9789264283008 (PDF) ; 9789264283015 (EPUB) ;9789264282995(print)
http://dx.doi.org/10.1787/eco_surveys-gbr-2017-en

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After a good performance until 2016, growth slowed in the first half of 2017. The unemployment rate has fallen to below 4.5%, but real wages are in a downward trend. Planned Brexit has raised uncertainty and dented business investment. Negotiating the closest possible EU-UK economic relationship would limit the cost of exit. The authorities should allow automatic stabilisers to work and identify in advance productivity-enhancing fiscal initiatives on investment, to be implemented rapidly were growth to weaken significantly in the run-up to Brexit, while safeguarding fiscal sustainability. Comprehensive policy packages should boost the productivity of lagging regions and cities, which requires local transport investments to foster connectivity, spending on research and development to raise innovation, housing investments to ease the matching of skills to jobs, and greater educational attainment and training tailored to business needs. Enhancing teachers’ training and other incentives, in particular in disadvantaged schools, would address teacher shortages and improve skills. Low-skilled workers participate less in lifelong learning and introducing targeted re-training programmes would boost competencies more broadly. Tax and regulatory reforms of non-standard forms of employment would offset workers’ weaker bargaining power and ensure better job quality.

SPECIAL FEATURES: REGIONAL PRODUCTIVITY; PRODUCTIVITY OF LOW-SKILLED WORKERS

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  • Basic statistics of United Kingdom, 2016

    This Survey is published on the responsibility of the Economic and Development Review Committee of the OECD, which is charged with the examination of the economic situation of member countries.The economic situation and policies of the United Kingdom were reviewed by the Committee on 21 September 2017. The draft report was then revised in the light of the discussions and given final approval as the agreed report of the whole Committee on 3 October 2017.The Secretariat’s draft report was prepared for the Committee by Rafał Kierzenkowski, Mark Baker, Peter Gal and Sanne Zwart, under the supervision of Pierre Beynet. The Survey also benefited from contributions from Jagoda Egeland. Research assistance was provided by Gabor Fulop. Elisabetta Pilati formatted and produced the layout of the document.The previous Survey of the United Kingdom was issued in February 2015.

  • Executive summary
  • Assessment and recommendations
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    • Reducing regional disparities in productivity

      The United Kingdom displays large regional disparities in productivity compared to most other OECD countries, with a large gap between London and most other regions. This holds back aggregate productivity and growth, and contributes to regional differences in living standards. To make the lagging regions more attractive to companies and workers, transport links between and within cities should be improved by increasing infrastructure investment outside London. Another policy priority is to improve the local business environment through more spending on innovation and increased support for investment and skills. Also, local authorities should have more freedom in setting education and training goals and the land-use planning system has to be more responsive to meet housing needs in cities. The role of subnational government is sub-par relative to the OECD average, but more devolution has recently been introduced in several city-regions. Such efforts towards more decentralisation need to continue to cover larger parts of the country and involve greater transfers of powers and responsibilities at the local level.

    • Improving productivity and job quality of low-skilled workers

      More than a quarter of adults in the United Kingdom have low basic skills, which has a negative impact on career prospects, job quality and productivity growth. Furthermore, unlike most other countries, young adults do not have stronger basic skills than the generation approaching retirement. The lack of skills development starts at young ages and continues in secondary education; despite a modest reduction in recent years, the educational attainment gap between disadvantaged and non-disadvantaged students remains high. The low participation in lifelong learning of low-skilled individuals puts them at risk of falling behind in meeting the changing skill demands of the dynamic labour market. Ongoing reforms to the vocational education and training (VET) system and apprenticeship system should have a positive impact on low-skilled productivity, enabling students to gain the necessary basic skills and for workers to find quality jobs. Improving the targeting of active labour market policies, and ensuring that the ongoing increases in the national living wage are delivered in a sustainable way will also play an important role in improving job quality and reducing the high rate of youth neither employed or in education or training. Policy responses to the rise of non-standard work will also be essential in improving the job quality of the low-skilled.

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