United Kingdom OECD Economic survey addressing Brexit and weak productivity
1. 2017 OECD ECONOMIC SURVEY
OF THE UNITED KINGDOM
Addressing Brexit and weak productivity
October 17th 2017, London
http://www.oecd.org/eco/surveys/economic-survey-united-kingdom.htm
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2. GDP growth has slowed
1
Source: OECD Economic Outlook: Statistics and Projections Database.
10. Sterling’s fall may not restore competitiveness
9
Note: Export performance is the ratio of export volumes to export markets for total goods and services.
Source: OECD Economic Outlook: Statistics and Projections Database.
11. 10
Monetary stimulus has increased fiscal space
Note: The Asset Purchase Facility (APF) was set up for the Bank of England (BoE) to carry out quantitative easing.
Source: House of Commons Library.
12. 11
Average maturity of public debt is high
Source: OECD Sovereign Borrowing Outlook 2017.
13. 12
Taxes paid vary by job type
Note: NICs: National Insurance contributions.
Source: Office for Budget Responsibility.
14. 13
Maintain the closest possible economic relationship with the
European Union after Brexit.
Identify productivity-enhancing fiscal initiatives on investment
that could be implemented swiftly, should growth falter.
Perform a tax and spending review to allow for additional fiscal
initiatives, including:
Raise National Insurance contributions for the self-employed;
Index the state pension on average earnings only.
Introduce debt-to-income ratios for borrowers depending on
exposure to shocks to safeguard financial stability.
Key macroeconomic recommendations
23. 22
Use the industrial strategy to develop integrated policy packages
based on current and emerging regional strengths.
Invest in improving inter- and intra-city transport links to foster
agglomeration effects.
Continue decentralisation by reaching deals with all city-regions
and grant local authorities more revenues from local taxes.
Continue to increase direct and indirect support for private and
public R&D, and business-university collaborations.
Adapt technical education to local business needs.
Raise training and other incentives to reduce teacher shortages
in disadvantaged areas and/or regions.
Key recommendations on regional productivity
25. 24
Many adults have only basic skills
Source: OECD (2016), "Building Skills for All: A Review of England", OECD Skills Studies.
26. 25
Similar shares of low-skilled youth and elderly
Source: OECD (2016), "Building Skills for All: A Review of England", OECD Skills Studies.
27. 26
Investing in early childhood education is key
Source: OECD (2017), Education at a Glance 2017: OECD Indicators.
28. 27
Skills are low at all education levels
Source: Calculations based on the PIAAC database.
29. 28
Many students exit education relatively early
Source: OECD (2016), Education at a Glance 2017: OECD Indicators.
30. 29
Participation in vocational education is low
Source: OECD (2014), "Skills Beyond School: Synthesis Report", OECD Reviews of Vocational Education and Training.
31. 30
Mainly low skilled are on zero-hours contracts
Note: Zero-hours contracts refer to labour contracts which do not guarantee any hours in a given week.
Source: Office for National Statistics.
33. 32
Self-employment could be used to bypass
minimum wage regulations
Source: Office for National Statistics and Eurostat.
34. 33
Prioritise funding to training and skills development of
childcare staff.
Use existing flexibility in reaching the National Living Wage
2020 target in case of negative economic shocks
Grant workers on zero-hour contracts enhanced job security
rights after three months.
Introduce tighter criteria to restrict self-employment to truly
independent entrepreneurs.
Introduce individually targeted programmes to improve
lifelong learning opportunities.
Increase financing and continue to promote the effectiveness
of active labour market policies.
Key recommendations on low-skilled
productivity and job quality
35. For more information
Disclaimers:
The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of
the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.
This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries
and to the name of any territory, city or area.
34
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http://www.oecd.org/eco/surveys/economic-survey-united-kingdom.htm
Hinweis der Redaktion
Higher productivity: For both Latvian and Estonian firms, higher productivity level significantly increases the likelihood that firms enter export. This is true for all types of exports.
Foreign capital: For both Latvian and Estonian firms, firms with a higher foreign capital share are more likely to enter export markets. These firms can be participating in the supply chains operated by MNEs or enjoy transfer of knowledge in foreign markets.
Larger size: Larger firms are significantly more likely to enter exports, even after incorporating the fact that more productive firms are larger. However, the probability of export entry decreases after firms reach a certain size.
Younger age: Younger firms are more likely to start exporting in both Latvia and Estonia, although this is not true for very young firms.
Higher capital intensity: Firms with higher capital-labour ratio are more likely to start exporting.
Good access to credit: Firms with higher liquidity ratio is more likely to start exporting in Estonia, while this is the opposite in Latvia. One possible interpretation is that Latvian firms are subject to credit constraints and therefore need to use internal cash flow to finance the upfront costs of export entry.
Hiring of skilled workers: Hiring managers or employees who previously worked for MNEs or exporting firms increases significantly the probability of Estonian firms to start exporting (Masso et al., 2015; Masso and Vahter, 2016). Hiring of ex-employees of exporting firms also increases the likelihood of export entry by Latvian firms. This underscores the importance of skilled workers in GVC participation. It is also in line with research that highlights the mobility of skilled workers as a key channel of knowledge spillovers (Dasgupta 2012).