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Short answer: The UK is below the leading G7 economies on the latest comparable productivity-level measure, but it is not uniformly weak on every indicator. OECD-based data for 2023 put the UK fourth in the G7 for GDP per hour worked, about 18% below the United States. The more striking weakness is inside the UK economy: a firm at the 90th productivity percentile produced 13 times the value added per worker of a firm at the 10th percentile on average in 2010–2022. UK innovation activity also declined, with 34% of surveyed businesses classed as innovation active in 2022–2024, down from 36% in 2020–2022. At the same time, UK business R&D reached £55.6 billion in 2024 and total R&D equalled 2.71% of GDP.
Those figures answer different questions. Productivity measures output generated from labour; innovation surveys measure business activity such as new or improved products, processes and organisational methods; R&D measures research investment. The available evidence supports a clear productivity comparison, but not a single, like-for-like international ranking of innovation-active businesses.
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What is being compared?
“Productivity” and “innovation” are related, but they are not interchangeable. A useful comparison starts by separating the level of output, the rate of improvement, the spread between firms and the inputs or activities that may support future growth.
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GDP per hour worked compares the value of goods and services produced with the hours used to produce them. It is commonly used for international comparisons because it adjusts for differences in working time. The result depends on national accounts, purchasing-power adjustments, estimates of hours and the reference year, so a ranking is meaningful only when those details are stated.
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Productivity growth
Growth asks how quickly output per hour or output per worker is increasing. A country can have a high level but slow recent growth, or a lower level that is catching up quickly. Growth rates from different periods should not be presented as if they were a current league table.
Firm-level distribution
National averages can conceal a wide gap between highly productive firms and businesses operating near the bottom of the distribution. The distance between the 90th and 10th percentiles helps show whether weak aggregate performance is concentrated among lagging firms or shared broadly across the economy.
Innovation activity and R&D
An innovation-active business has reported innovation activity under the survey’s definitions. That can include introducing a new or improved product or process, undertaking innovation that was abandoned or incomplete, or engaging in innovation-related activities. R&D is an input: money spent on systematic research and development. Neither measure is a direct substitute for productivity or a guarantee that research will become a commercially successful product.
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UK productivity in the latest G7 comparison
The newest international productivity-level comparison identified here is for 2023. A September 2026 House of Commons Library briefing, using OECD data, placed the UK fourth among the G7 for GDP per hour worked. The United States was highest and Japan lowest; UK productivity was approximately 18% below the US.
| Measure | Finding | How to interpret it |
|---|---|---|
| Reference year | 2023 | This is the latest comparable level comparison in the available evidence. |
| Metric | GDP per hour worked | Output is measured against hours, not simply the number of workers. |
| UK position | Fourth in the G7 | The UK was below the three G7 economies ahead of it on this measure. |
| US comparison | UK about 18% below the US | The percentage is a level gap for 2023, not an annual growth rate. |
| Other positions | US highest; Japan lowest; exact positions of the remaining G7 members not stated in the briefing | Do not infer an exact order for Canada, France, Germany or Italy from the information available here. |
This ranking needs a date and a methodological warning. The briefing’s data were released before the Office for National Statistics introduced its new productivity measurement approach. A later UK series may therefore not be numerically identical to the 2023 comparison. The existence of a revised domestic series does not by itself overturn the international result; it means that analysts should not mix old and new measures without checking definitions.
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The long slowdown: useful historical context, not a new ranking
Older ONS analysis explains why the UK’s current position attracts attention. UK output-per-hour growth averaged 1.9% a year from 1997 to 2007, then slowed to 0.7% a year from 2009 to 2019. Across the G7, the corresponding averages were 1.9% and 0.9%.
The comparison shows a marked UK slowdown after the financial crisis. It does not provide a current 2023 or 2024 league table: the ONS series used for this historical analysis ends in 2020. The pre-2007 and post-2008 periods also cover different economic conditions, so they should be read as evidence about trend changes rather than as a forecast of the next decade.
OECD’s 2026 productivity compendium places the UK experience in a wider advanced-economy pattern. Virtually all OECD countries were more productive in 2024 than two decades earlier, but the pace of improvement had roughly halved since the early 2000s. The OECD estimates that, if pre-2007 trends had continued, productivity levels in 2024 would have been 10% to 20% higher than they actually were. In 2024, US labour productivity rose 2.2%, while the European Union recorded 0.2%. Those figures provide international context for the slowdown, but the evidence listed here does not give a directly comparable UK growth rate for 2024.
Why the UK average hides a much larger firm gap
Aggregate productivity can look moderate even when the economy contains a small group of exceptionally productive firms and a large tail of businesses producing much less value per worker. OECD MultiProd v2.1 estimates for 2010–2022 show exactly that pattern in the UK.
| Country | 90th-percentile firm versus 10th-percentile firm | Measure and period |
|---|---|---|
| United Kingdom | 13 times the value added per worker | Average estimate, 2010–2022 |
| France | 5 times | Average estimate, 2010–2022 |
| Spain | 5 times | Average estimate, 2010–2022 |
| Canada | 7 times | Average estimate, 2010–2022 |
The UK’s 13-to-1 ratio is not a claim that every British firm is 13 times more or less productive than another. It compares firms at two points in the distribution and uses value added per worker, not GDP per hour for the whole economy. OECD also warns that its estimates are not directly interchangeable with ONS estimates because populations and weighting methods differ.
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What the dispersion suggests
The unusually wide UK spread is associated particularly with weaker results among lagging firms. That points to a different policy and management challenge from simply creating more frontier companies. Diffusion of better technology, management practices, skills and financing to ordinary firms matters because raising the bottom and middle of the distribution can lift national productivity even if the frontier changes little.
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The distribution statistic also explains why a national average should not be used to describe every region, sector or employer. A high-productivity multinational, a digitally intensive scale-up and a small local service business contribute to the same headline measure but face different constraints and opportunities. The 13-to-1 result is therefore a warning to examine firm dispersion alongside the G7 ranking.
How innovation activity is changing in the UK
The UK Innovation Survey 2025 asked businesses about activity during 2022–2024. It found that 34% were innovation active, down from 36% in 2020–2022.
| Survey detail | Value | Qualification |
|---|---|---|
| Innovation-active share, 2022–2024 | 34% | Businesses meeting the survey’s innovation definition |
| Innovation-active share, 2020–2022 | 36% | Previous survey period |
| Businesses sampled | 31,150 | Businesses with 10 or more employees |
| Responses | 14,075 | 45.2% response rate |
This is a business survey, not a census of every innovative activity in the economy. Firms with fewer than 10 employees are outside the stated population, and the result reflects the sectors and locations covered by the survey design. Changes in the share can reflect economic conditions, firm composition and reporting behaviour as well as changes in underlying innovation.
Why 34% cannot be read as an R&D rate
Innovation-active firms can innovate without maintaining a formal R&D department, while firms that spend on R&D may not bring a new product or process to market during the survey period. Patents, product launches, process changes and organisational improvements also capture different parts of the innovation process. The survey itself notes that innovation varies with firm size, sector and location and can be difficult to measure consistently.
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UK R&D spending: substantial input, modest change in intensity
ONS estimates show that UK business-performed R&D reached £55.6 billion in 2024. In current prices, that was £2.4 billion, or 4.5%, higher than in 2023. Software development accounted for £10.3 billion, equal to 18.5% of business-performed R&D.
Total UK R&D expenditure, including business, government, higher-education and other sectors, was 2.71% of GDP in 2024, compared with 2.72% in 2023. ONS attributes the slight fall in intensity to the GDP denominator rather than to lower R&D spending. This is why absolute spending and spending as a share of GDP should always be reported together.
| R&D indicator | Latest figure | Comparison or context |
|---|---|---|
| Business R&D expenditure | £55.6 billion, 2024 | £2.4 billion higher than 2023 in current prices; 4.5% increase |
| Software development share | £10.3 billion, 2024 | 18.5% of business-performed R&D |
| Total R&D intensity | 2.71% of GDP, 2024 | Down slightly from 2.72% in 2023 |
These numbers demonstrate a sizeable research base, but they do not establish how efficiently research is converted into commercial innovation, productivity or export growth. Translation can depend on management, skills, competition, finance, procurement, infrastructure and the ability of less productive firms to adopt existing technologies.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Can the UK be ranked against peers on innovation?
Not from the figures above alone. The 34% UK innovation-active rate is a UK survey result. The available evidence does not provide matched rates for the United States, Germany, France, Canada, Japan or other advanced economies using the same population, period, industry coverage and definitions. It would therefore be misleading to label the UK a leader or laggard on innovation-active businesses solely because its domestic rate is 34%.
The OECD Business Innovation Indicators database is designed for cross-country and cross-sector comparisons beyond R&D expenditure or patents. Its April 2026 release covers 2020–2022 for 33 OECD member countries and seven partner or accession economies. The UK Innovation Survey also provides a subset of industries aligned with OECD reporting, which can support international comparison when the matching tables and definitions are used.
The OECD Science, Technology and Innovation Scoreboard offers a broader dashboard of more than 1,000 indicators. That breadth is useful, but it makes indicator selection essential. A country can rank highly in public research, venture capital or patenting and less highly in business adoption, commercialisation or innovation revenue. There is no single number that captures all of those dimensions without imposing a value judgment.
Why productivity and innovation should not be combined into one league table
A combined ranking would mix measures with different populations, dates and units:
- The productivity level comparison covers 2023 and uses GDP per hour worked.
- The innovation-active survey covers business activity during 2022–2024 and includes firms with at least 10 employees.
- Business R&D spending covers 2024 and is reported in pounds, while R&D intensity divides total spending by GDP.
- The firm-dispersion estimate covers 2010–2022 and uses value added per worker.
Those measures can be analysed together, but one cannot be substituted for another. A country may have high R&D intensity and weak productivity diffusion, or a lower innovation-survey rate because its economy has many small firms outside the survey population. Timing also matters: research spending today may affect products, processes and productivity several years later.
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Use the following sequence when reading a new international comparison or building one:
- Start with the productivity level. Specify GDP per hour or output per worker, the reference year, the purchasing-power basis and the source.
- Add productivity growth. State whether the figure is annual, a multi-year average or a pre- and post-crisis comparison. Do not treat a historical growth series as a current ranking.
- Check the distribution. Compare frontier, median and lagging firms where possible. A 90th-to-10th percentile ratio reveals more about diffusion than an average alone.
- Define innovation activity. Record the survey period, minimum firm size, industries, response rate and activities counted as innovation.
- Separate inputs from outputs. Report R&D spending and R&D intensity separately from patents, new products, process changes or turnover attributed to innovation.
- Match countries and periods. Only rank innovation rates when countries use comparable definitions, populations and years. If a value is unavailable, say so instead of filling the gap with an unrelated indicator.
- Check revisions. National statistical offices can change methods, including the UK’s revised productivity approach. Keep the methodology beside the number in every table or chart.
What the evidence means for the UK
The immediate productivity issue is diffusion
The UK’s fourth-place G7 position and 18% gap with the US matter, but the 13-to-1 firm spread adds a more specific diagnosis: performance among lagging firms is a central part of the problem. Policies or business strategies focused only on frontier research will not automatically close that gap. Adoption of proven digital tools, better management, workforce skills and access to growth finance can be just as important as creating new inventions.
Innovation inputs are not the same as innovation outcomes
£55.6 billion of business R&D and total R&D equal to 2.71% of GDP indicate meaningful research investment. The fall in innovation-active businesses from 36% to 34%, however, shows that spending totals and participation rates can move differently. A complete assessment should ask who is innovating, what kind of innovation is being undertaken and whether it reaches customers, workers and supply chains.
International claims need matched evidence
The strongest defensible international statement is about productivity: the UK ranked fourth in the G7 for GDP per hour worked in 2023 and was about 18% below the US. For innovation, the defensible statement is narrower: 34% of surveyed UK businesses were innovation active in 2022–2024, while a like-for-like peer ranking is not established by these figures.
Bottom line
The UK is a middle-ranking G7 economy on the latest comparable productivity level, not a universal outlier. Its larger structural weakness is the distance between highly productive firms and laggards, alongside a long slowdown in productivity growth. UK businesses continue to spend heavily on R&D, but the innovation-active share fell to 34% in the latest survey. To judge whether the UK is catching up, track productivity levels and growth, firm-level dispersion, innovation participation, R&D inputs and measurable outputs separately—and attach the date, definition and method to every comparison.
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