LONDON, (Reuters) – Low business investment and weak management are three of the major causes for Britain’s high productivity gap, new research has shown.

For years, the so-called productivity puzzle in Britain has been a problem that economists and policymakers have struggled to solve.

British productivity, in terms of production per hour, is approximately 15% lower than the United States, Germany, France and Canada, but higher than Japan, Italy, Canada, and it has not grown much since the financial crash.

Boris Johnson, the Prime Minister, raised the issue as did his predecessors. But few economists were able to agree with him that past migration of low-paid workers from Europe was much to blame.

The London School of Economics researchers and Resolution Foundation thought tank found Monday that Britain’s lowest level of investment is the most significant difference to countries of higher productivity.

In 2019, business capital investments in Britain accounted for 10% of the gross domestic product, compared to 13% in France, Germany and the United States.

British companies invested in research and innovation 1.2% of their GDP. This compares with the average of 2% anywhere else. The rate of patenting in British was also half of the others, even though there was a lot of strong scientific research.

An international survey on management practices found that high-quality management was much more common in Germany and America than it is in France.

The underperformance of Britain was not due to other factors such as Britain’s weaker manufacturing sector, large differences between productive and inefficient companies or workers stuck at ‘zombie firms’.

The UK’s 2020s were marked by a poor productivity record and misdiagnosis about why it is occurring. We should not focus solely on UK’s long-tail unproductive companies. Instead, we must see an economy-wide improvement in the way firms innovate and invest as well as the management and training of staff,” Greg Thwaites from the Resolution Foundation, research director.

Economists agree that faster productivity growth will lead to longer-term improvements in living standards.

The researchers found that raising Britain’s investment levels to the U.S., German, or French level would short-term result in a drop in household consumption and require Britain to borrow more abroad.

This increase in domestic investment would result in an additional 8 percent in GDP growth in 20 years. However, it may take up to 15 years for household consumption to recover from its initial drop.

According to the research, “The balance of consumption, consumption and net exports is one of the most difficult tradeoffs policy will have to address.”