Country needs successful firms to grow and struggling ones to shrink, says Resolution Foundation
The UK needs more businesses to fail, or at least shrink, to solve the economy’s long-running productivity crisis, a study has argued.
The country’s lack of “economic dynamism”, whereby weaker firms or lower productivity sectors shrink, and more productive ones grow, has caused GDP to be 4% lower between 2008 and 2019 than it would otherwise have been, according to a paper published on Monday by the Resolution Foundation.
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