Cosy UK firms 'lagging behind'

MANAGEMENT consultancy McKinsey is urging the Government to cut red tape and reform cosy industries to narrow Britain's 'productivity gap' with its rivals.

Its latest study finds US workers 39% more productive than the British, while French and Germans lead us by 20%. This suggests the average UK worker takes a year to do what his US counterpart gets done by mid-September.

The gap is even bigger in manufacturing. UK factories owned and run by Americans are 89% more productive.

McKinsey blames regulation, cosy businesses and lazy management who embrace fads and buy new technology rather than changing how their firms operate. The study found that the average tech kit improves labour productivity just 4%, compared to a 25% gain from improving methods.

Among the cosiest industries is High Street banking, 'where the market structure is in danger of becoming frozen,' the consultancy says. Telecoms and power were opened up in the 1990s, and productivity surged.