British companies top Europe's productivity league

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The Independent Online

Britain dominates a league table of Europe's best performing companies despite "poor performance" by the remnant of the UK's industrial sectors, government figures showed today. An annual grading of the top 700 companies in Europe by the Department of Trade and Industry shows that the UK has the largest number of wealth-creating firms.

The exercise, known as the value added scoreboard, seeks to rank companies according to a formula based on their productivity.

It found that British companies made up 26 per cent of the top 700, compared with 24 per cent in last year's survey. Both France and Germany lost market share.

Meanwhile, the quantity of wealth generation by large companies increased by 10 per cent on last year, outstripping both France and Germany. UK companies held the top or second-placed slot in 14 of the 39 sectors in the report. European champions included HSBC, the drinks group Diageo, the insurer Aviva and the tobacco giant BAT.

Alistair Darling, the Trade and Industry Secretary, said the "outstanding performance" showed the UK was competitive on the world stage. "British firms' ability to compete in the global economy largely and increasingly depends on creating higher levels of value added through innovation."

But the report showed that large UK businesses had no presence among traditional manufacturing sectors such as technology, hardware, personal goods, car makers and paper companies. It also boasted a small showing in sectors such as industrial engineering, industrial metals and electronic equipment.

But Mike Tubbs, a senior industrialist at the DTi, who helped compile the report, said UK industrial companies had "good placement" below the top 700. "The UK can do it although it would be nicer to have bigger ones and more of them," he said. "It's not that we can't do it, it's just that we have a smaller number of companies."

He said the UK had benefited from specialisation, which was a cause for its overall high ranking. "UK companies have got themselves into sectors where returns tend to be high, and we have a low presence where returns are low," he said.

He added that even in sectors such as chemicals, the UK had one of the most efficient wealth creators in Johnson Matthey.

The DTi calculated value added by subtracting employee costs, depreciation and goodwill write-offs from operating profits. Efficiency in wealth creation measures how much output a firm generates as a percentage of its inputs.

The UK's efficiency rating, which ignores the size of the company, for its top 800 companies was 161 per cent, compared with 153 per cent for the European 700 as a whole.