Report on Competition in the UK

The UK is “mediocre” compared to other business nations…

Small Business News – 14th September 2007

The Institute of Directors (IoD) released its findings from its Competitiveness Conference today. The result is that the UK is “mediocre” in competitive terms in comparison to other business nations.

The report generously says that UK productivity performance has remained “flat” for the last 10 years with a dip in production performance since 2000. And yet of those questioned at the conference the majority rated the intensity of business competition in the UK as quite high, leaning toward intense competition, price cutting and a flux in market share as opposed to an almost complete lack of competition.

The findings show that productivity is driven by a number of factors including

  • Competition
  • Enterprise
  • Innovation
  • Investment and
  • Skills

And yet, when questioned, respondents at the conference rated the following as their “number ONE reform to boost UK competitiveness”

  • Less & Simpler Tax – 30%
  • Less Regulation – 15%
  • Improved Education & Skills – 5%

A high proportion of businesses rated the tax burden on incentives to work & invest as very high with the UK business taxation as being both inefficient & complex with government regulation also holding back business and the majority of public spending seen as not only wasteful but unnecessary.

Business leaders also took a dim view of the UK’s Education system, tending to believe that it is not meeting the needs of an advanced and competitive economy.

Other factors affecting UK business including opinion of our road & rail systems, which were found to be wanting, whilst air transport faired more favourably.

Further questions revealed a lukewarm response to the ability of UK companies to adopt global business best practice in all business functions (including production, distribution, marketing etc)

Overall the UK was seen to be a more attractive location for foreign investment.

The IoD concluded that

  • Competition hinges on maximising the absolute level of productivity.
  • The key to future success is a combination of
    • Hyper-competition (maximum competitive forces in the economy to stimulate innovation, price and output quality)  and
    • The enabling state (maximising the productivity of public spending, reducing tax burden, boosting incentives)
  • UK business competitiveness is mediocre
  • UK Business could do better. A lot better.
  • World class performance is needed.

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