Podcast Summary: BCG's Raoul Ruparel Talks UK Productivity

Podcast: Bloomberg Talks
Host: Bloomberg
Guest: Raoul Ruparel (Director, BCG Center for Growth; former adviser to UK PM Theresa May)
Date: February 23, 2026

Overview

This episode features Raoul Ruparel from Boston Consulting Group discussing the findings of BCG’s new report on the UK's long-standing productivity problems. The conversation explores sector-by-sector trends, the deeper causes behind the UK’s lagging productivity, the changing landscape in financial services, and the challenge—and opportunity—of harnessing artificial intelligence to drive future growth.

Key Discussion Points & Insights

1. Trade Uncertainty and Economic Context

• Host opens by referencing recent trade news, specifically Donald Trump’s announcement of a potential global tariff of 15%, raising concerns about increased uncertainty for the UK government.
• Raoul Ruparel:

  “It's obviously uncertain and adds another layer of difficulty for something the government to navigate.” (02:12)
  He notes it’s unclear how this tariff will affect countries with existing US trade deals but frames it as a familiar challenge for the UK.

2. UK’s Productivity Problem in a Global Context

• The UK’s productivity growth has lagged since the late 1990s, with major sectors seeing stagnation or decline. Compared to peers, the UK is underperforming in key areas.
• Raoul Ruparel explains:

  “The UK is doing worse in some big sectors than a number of peer countries and certainly then the global productivity frontier.” (03:22)

  • Financial Services: Once close to the world’s best, now falling behind.
  • Manufacturing: Stagnant for years, with the "frontier" (best performers) pulling away.
  • Information & Communications: UK lagging the US but still growing faster than G7 peers.

  “In information and comms, the frontier is in the last few years at least accelerating away from the UK, driven particularly by the US. But...the UK is actually still growing faster than the G7 in this sector.” (03:22)

3. Decline in Financial Services Productivity

• Surprising to some given the sector’s historical strength, the UK's financial services have stagnated for 15 years since the financial crisis.
• Raoul attributes this to:
  • Regulatory changes and a rebalancing of risk
  • Shift from banking/investment banking to auxiliary services like asset management and payments (less productive on paper, but growth opportunities exist)
  • Other countries, even those hard-hit by the financial crisis, have “done a slightly better job” of diversifying and growing productivity
• Memorable insight:

  “Our financial services sector... is less banking and investment banking dominated than before the financial crisis. We've moved more to sort of auxiliary services, asset management, payments etc and these services are...inherently a bit less productive.” (04:38)

4. Government Response and Policy Recommendations

• The interview probes what government can do to address this complex landscape.
• Raoul recommends:
  • Targeted interventions rather than one-size-fits-all
  • Addressing energy prices and planning in manufacturing
  • Regulatory reform in financial services
  • Reviving and focusing industrial strategy to support sectoral strengths

  “I think there are sectors like manufacturing where the government is pushing on some of the structural problems...but more needs to be done there.” (06:11) “Making sure that [industrial strategy] really is a focus and getting back to that core mission of driving growth will be really important.” (06:58)

5. Artificial Intelligence: Opportunity and Challenge

• The potential for AI to deliver large productivity gains is real, but the UK faces structural barriers:
  • A "long tail" of low-productivity firms has grown since 1997—the lowest 5% are now less productive than in 1997.
  • Productivity benefits from AI will only be realized if technology is widely adopted across all firms, not just leading ones.
  • Without broad adoption, AI could widen the productivity gap within the UK economy.
• Raoul’s call to action:

  “If you believe the productivity benefits from AI partly come through adoption...that is something that the UK has traditionally, traditionally not been great at. That’s why we have this long tail of low productivity firms.” (07:24) “What the UK has to avoid is...a few firms at the top adopting IT and getting productivity gains and then a big gap between those in the middle and the bottom.” (07:24)

  • Government should support the spread of best practices and practical use cases to help all firms—not just the most productive—adopt AI.

Memorable Quotes

• On Trade Uncertainty:

  “It is another source of uncertainty, but the government and most countries have had to navigate this for the past year and I think they will be taking it in their stride.” (02:12, Raoul Ruparel)

• On Financial Services’ Decline:

  “We are still better than peers in financial services in many cases.” (03:22, Raoul Ruparel)

• On AI and Productivity:

  “The number of low productivity firms has increased in real terms since 1997...The lowest 5% are actually less productive in real terms than they were in 97.” (07:24, Raoul Ruparel)

Important Timestamps

• 02:12 – Raoul Ruparel on global trade uncertainty and its effect on the UK
• 03:22 – Cross-country productivity comparison, analysis by sector
• 04:38 – Causes of the UK’s decline in financial services productivity
• 06:11 – Government interventions needed and sector-specific policy
• 07:24 – Challenges of AI adoption, the long tail of low-productivity firms

Tone and Takeaways

The conversation is frank yet optimistic, recognizing the UK's structural challenges but highlighting potential for improvement with sector-focused policies and a smart approach to technology adoption. Raoul Ruparel brings a balanced, nuanced perspective, emphasizing that the UK's productivity story is not uniformly bleak—and the right policy responses could make a significant difference.

For Listeners:

This episode is essential for understanding not just the headline statistics about UK productivity, but why those issues persist and what solutions might be effective. Ruparel’s sector-by-sector analysis and emphasis on spreading technological gains provide a detailed roadmap for policymakers and business leaders alike.