The government’s disciplined fiscal policy complemented by the Bank of England’s independent conduct of monetary policy allows us to contemplate continuing conditions favourable to economic growth, full employment and major improvements in public services.
In these circumstances the productivity of the United Kingdom rises in significance as a factor that could restrain the wealth of the country during the 21st century.
In terms of output per hour worked, the UK is far behind France, Germany and the USA. Between a third and a half of the deficiency is due to a lack of investment in plant, machinery and other physical assets.
As a more predictable economic climate takes away uncertainties, attitudes to new investment may change and the chancellor's various means of encouraging business investment are to be welcomed.
What is astonishing is to find that two thirds of the productivity gap with the United States is because Britain lags behind in innovation.
This country is one of the most ingenious and inventive countries in the world but we do not follow through to gain the economic benefits.
Too often something is invented in Britain but commercialised in America or Japan.
In this context I am pleased to see improved tax incentives for research and development coming on top of the government’s increased budget for scientific research and its commitment to excellence in our universities.
Governments can only enable. There needs to be a culture change in boardrooms and business schools to give far greater emphasis to business renewal.
It is not just vital in order to catch up with the United States. It is vital if we are to hold our own in competition with the rising economic power of China, India and South East Asia.
There is another dimension to productivity. It is not a concept that should apply only to the market driven sectors of the economy. It must apply to the public sector too.
There has to be developed an agreed measure equivalent to productivity for health, education, public transport and local authorities. With increasing resources committed to public services there must be systematic accountability for what is being achieved.
The peacetime history of the last hundred years has been about developed countries learning how to manage their economies to mobilise the energy and abilities of the people to increase their own wealth and opportunities.
It is a continuing process to which this country has made a major contribution.
That contribution has never been greater than what has been achieved over the last seven years by this government.
It is not at an end. Indeed the prosperity and temperament of Britain depends on progress continuing.
Productivity, in one form or another, will be a major economic issue in the first half of the 21st century.
Nigel Beard is Labour MP for Bexleyheath and Crayford.
