Britain’s manufacturing lobby has called on George Osborne to protect infrastructure and investment spending

Manufacturers and retailers are offering to do more to improve Britain’s dismal productivity performance in return for stronger support for infrastructure investment, research and tax incentives to encourage higher rates of pay.

The productivity challenge, one of the Chancellor’s priorities, is highlighted in reports released by the EEF, the manufacturers’ organisation, and the British Retail Consortium (BRC) in an effort to influence next month’s Budget.

The EEF has invested heavily in promoting suggestions and policies in a paper that predicts 40pc of the next decade’s productivity gains will come from the manufacturing sector.

Ahead of an upcoming Treasury report, the organisation argues that the Government must not cut back spending on infrastructure or research.

The business lobby, which represents 5,000 members, calculated that in the past five years output per hour has risen four times faster in manufacturing than across the economy as a whole. Economists have argued that productivity growth is vital to ensure living standards continue to rise. The EEF found that manufacturers spend six times more on R&D than their output share of the economy.

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