Smaller firms could boost economy if more like German counterparts, report says

Smaller firms could add billions of pounds a year to the UK economy if they were as productive as their counterparts in Germany, according to a report.

Research for NatWest showed that employees in small to medium sized enterprises (SME) in the UK  generate £147,000 worth of output per year on average, less than half of those in Germany.

The gap underlines official figures showing that UK productivity fell in the first quarter of the year, said the report.

Even though more than two-thirds of SME decision makers believe improving productivity is important,  two-fifths do not know what productivity means in practice, making it difficult for them to identify the steps to improve, said NatWest.

The research found more than half of German SMEs offer employees the ability to work flexibly, while 44% provide clear career development and guidance, seen as important measures to boost productivity.

Alison Rose, chief executive of NatWest Commercial and Private Banking, said: “From talking to thousands of our business customers every year, we know that many small to mid-size businesses struggle to understand how best to improve productivity.”