The EEF (www.eef.org.uk) says that the Chancellor of the Exchequer was right to emphasis the critical need to improve UK productivity in his recent Autumn Statement, but regretted that he had “ignored a simple change that would deliver a quick boost to the UK’s efficiency”.

The manufacturers’ organisation argues that Philip Hammond should have changed rules that mean equipment is included in rates calculations.

EEF chief executive Terry Scuoler believes that this dissuades companies from investing in new and more-efficient machinery for fear of being hit by higher rates, a concern which holds back the UK’s productivity.

Mr Scuoler said: “One of the easiest ways to increase the Chancellor’s desperately sought after productivity is to encourage manufacturers to invest in more efficient equipment.

“Continuing to put them off through fear of higher business rates makes no sense and flies in the face of international practice.”

A recent report by Ernst & Young consultancy claims that removing plant and machinery from the rates system would result in a £6.7 billion reduction in business rates receipts between 2016 and 2020.

The Autumn Statement revealed a £23 billion fund to improve productivity with billions for research and innovation and improvements to the transport network.

However, Stephen Roper, from the Enterprise Research Centre at the Warwick Business School, said that “borrowing to address the productivity gap is a gamble”.

He added: “As the Chancellor indicated, it currently takes an average UK worker five days to generate the same productivity as a German employee generates in four.

“It remains to be seen how effective his package of measures will be in addressing the productivity challenge. Public investment alone is unlikely to close the gap, however.

“UK firms too will need to significantly increase their investment, which is perhaps unlikely given the uncertainties of Brexit.”