UK productivity lags that in the US by about 40% and in France and Germany by around 20%.
On research and development, the aggregate amount of R&D conducted by UK firms still lags international competitors, with spending by smaller firms particularly low.
UK investment in total is also lower than that of foreign competitors, and has been for decades, the report says.
Recent figures show investment has been on an upward path in the UK, with revised estimates showing 5% growth in investment in 1996 and 6% in 1997. Business investment during these years grew by 9% in each year. But the UK’s investment performance is still poor by international standards.
Millennium bug compliance and preparations for euro accounting will boost investment spending in 1999, though many firms will cut other investment as the economy slows, the report predicts.