3
DSR 11C
But, to be frank, Britain has created some of her own
problems. No economy exporting almost a third of its
output can afford to neglect competitiveness.
But that
is what we did. Our unit labour costs rose too high.
The reason was the all too familiar one of wage rises
not backed by productivity gains.
Our relative lack of competitiveness, however, goes
back much further. It has been due to a number of
causes. Failure of productivity to rise as fast as
that of our competitors over many years is a major one.
That poor productivity record has varied roots, in,
for example, the spread of restrictive labour practices
preventing investment being used efficiently, in an
inadquate stimulus to innovation and technological
change, and in a failure to apply changes in
production techniques.
But we have turned the corner. We are firmly on the
way to recovery. I do not want to bore you with
statistics; just let me say that productivity and
competitiveness are improving and, most important,
the annual rate of inflation is now in single figures
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