Productivity is a
major concern for the UK economy and we lag behind many of our
European and global competitors.
One of the main
reasons for this problem is that when profits are generated by many
UK businesses they are squirrelled away in tax havens and re-invested
in speculative financial markets in order to avoid or evade a proper
contribution to UK taxation. This in turn means that the investment
in our capital infrastructure and our capital equipment is severely
restricted.
There seems to be a
belief in some UK business that instead of investing in new and
modern capital equipment we can plug the productivity gap by applying
ever-increasing amounts of increasingly cheap labour to our
industrial base, ignoring the fundamental economic law of diminishing
returns. And when this fails to work we get into the situation we
have now where increasing productivity places all of its eggs in one
basket, that of reducing wages even further and/or trying to maintain
the same output with fewer people.
There is a direct
connection between the criminal or morally reprehensible behaviour of
corporate tax cheats and the falling productivity rate in the UK and
it is a problem which governments must deal with, and very soon,
because it will only get worse the longer it is left unaddressed.
