UK firms could unlock £100bn in growth by acting more like magpies says leading business group

UK firms are years behind their Danish counterparts, for example, when it comes to adopting technology, the CBI said

Manufacturing stagnated as the UK economy spluttered ahead by 0.3 per cent in the third quarter of 2019 (PA)

UK companies should act more like “magpies” and less like “ostriches”, in order to unlock £100bn in extra economic growth and cut inequality by 5 per cent, a leading business group has said.

The magpie approach means adopting the best tried-and-tested technologies instead of remaining stuck in old ways, according to the Confederation of British Industry (CBI).

The CBI in a report published on Monday argued that the Government’s industrial strategy should prioritise ensuring that proven technologies like cloud computing, mobile technology, e-purchasing and cyber security, reach more businesses.

UK firms are years behind their Danish counterparts, for example, when it comes to adopting computer systems for e-purchasing, customer relationship management and enterprise resource planning, the CBI said.

The business group said the UK’s best performers were highly innovative, but the struggles of many firms mean that the UK compares unfavourably to international rivals in several areas.

It said that 69 per cent of UK firms are at the lower end of the productivity scale, whereas the figure is just 65 per cent in France and 60 per cent in Germany.

In 2015, the proportion of UK firms adopting cloud computing was nearly 30 percentage points below Europe's best performers, the CBI said.

The gulf between the best and worst managers is also worse in the UK than in any other G7 country. Management quality scores of the best performing UK firms are 1.7 times higher than those of the worst performing firms, the CBI said.

“While the eyes of the business world can often be on ‘the next big thing’ in cutting-edge technology, too many firms are missing out on what’s right under their nose,” Carolyn Fairbairn, CBI director-general, said.

“Failing to adopt the nuts and bolts technologies of today is leaving a yawning gap in productivity and pay between businesses,” she added.

“In too many areas of diffusion we struggle against our international competitors, with more workers being employed by less productive firms here than in France and Germany, while by some markers we are almost a decade behind the Danes.”