Technology increases productivity
28.03.2003

IT contributes 25 per cent a year to the UK's output growth, says survey

Investment in IT is the most important factor in improving the performance of businesses, according to a British Chambers of Commerce (BCC) survey.

The study showed that out of the top five actions that improved business performance in the last five years, over half of all companies surveyed believed investment in IT made the biggest contribution.

A related study, conducted by consulting firm London Economics, says investment in IT contributed 25 per cent per annum to the UK's output growth and 47 per cent of the total labour productivity growth between 1992 and 2000.

The research measured productivity growth across different economic sectors, showing that IT contributed 43 per cent to the manufacturing sector's output growth and 27 per cent to the financial services sector.

Liz Grant, director for e-policy and delivery for the Department of Trade and Industry (DTI), says the research will help the DTI better understand the impact of IT on productivity.

'The DTI welcomes the contribution that this study makes to our growing understanding of the positive links between IT and productivity, as well as the sectors that show the largest gains,' she said.

The BCC believes that to continue improving productivity growth, the government needs to cut business tax and regulatory burdens, provide more incentives for investment into IT and training, and improve the transport system.