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The New British Economy

Published online by Cambridge University Press:  26 March 2020

Richard Kneller  and
Garry Young
Richard Kneller
Affiliation:
University of Nottingham
Garry Young
Affiliation:
Bank of England
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Abstract

The British economy has performed well since the recession of the early 1990s. How much of this is due to the revolution in information and communications technology (ICT)? We find that the stock of computing equipment has grown at a similar rate to that seen in the US, but there appears to have been no similar ICT-induced pick-up in productivity growth. We suggest that any underlying improvement in productivity growth has been obscured by a slowdown in manufacturing and by the need for the unemployed to be absorbed into employment. We find no evidence yet of any clear effect of ICT on pricing and suggest that any benefit of greater competition is likely to come about by encouraging productivity growth rather than by reducing margins. We argue that the main cause of Britain's improved performance lies in the labour market. Looking forward, we are optimistic that the benefits of ICT will become more apparent as the factors that have obscured it become less important.

Type
Articles
Information
National Institute Economic Review , Volume 177 , July 2001 , pp. 70 - 84
Copyright
Copyright © 2001 National Institute of Economic and Social Research

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Footnotes

∗

This paper was completed while both authors were at the National Institute of Economic and Social Research. The views expressed do not necessarily reflect those of the Bank of England. We are grateful to participants at seminars hosted by NIESR, the University of Kent and the House of Commons Treasury Committee for comments and suggestions. We are responsible for any remaining errors.

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