[holding answer 5 July 2007]: The key to the UK's competitiveness is improving our productivity rather than just our trade balance in itself.
The Government’s approach to raising productivity centres on maintaining macro-economic stability so as to provide firms and individuals with the certainty needed to invest in the future, as well as implementing micro-economic reforms to remove barriers that prevent markets from functioning efficiently.
The Government have identified five drivers of productivity—investment, innovation, skills, enterprise, and competition—and a wide-ranging programme of reforms have been initiated to boost productivity in these areas.
Similarly, at the EU level, the UK has been driving the productivity agenda—negotiating to remove barriers to trade, which would make it easier for UK businesses to trade across the EU.