"The UK currently faces a large and longstanding productivity challenge," said the FSB. "When the economic crisis hit, productivity fell sharply, as in other countries. However, while productivity has rebounded elsewhere, the UK continues to lag behind."
It added: "Recent FSB research shows that small firms' productivity levels finally began to turn a corner at the end of 2014, but there is still a long way to go. UK productivity levels are currently 17% lower than the G7 average."
The report recommends incentivising business investment; universal access to high quality, affordable broadband; investment in regional growth; support for innovative businesses; addressing skills and training shortfalls; an ambitious public procurement policy; and getting more businesses exporting.
Mike Cherry, FSB national policy chairman, said: "This cross-party report concludes that while ultimately improving productivity is an issue for the private sector, the next Government has an important role to play in addressing this long-standing weakness, regardless of which party or parties form the next administration."
He added: "Closing the productivity gap is the best way to boost the long term health of the UK economy. It is key to reducing the budget deficit, and delivering higher wages and living standards. What is clear is these efforts require a long-term effort and focus, which is why the FSB is arguing for the establishment of a UK Small Business Administration to provide that role."
Annemarie Morris MP, chair of the All Party Parliamentary Small Business Group said: "The UK's comparatively poor level of productivity is one of the biggest challenges facing our economy. We have a lot of catching up to do in order to keep pace with other leading economies. This report has identified a number of practical recommendations that could be taken up by the next Government. Solving the UK productivity puzzle is critical to helping employers increase wages and boosting the long-term wealth and prosperity of the nation."
Small business productivity data was first published in the FSB's Q4 2014 Small Business Index. Download a copy here.
International Comparisons of Productivity can be found here.
