This book tells the story of the role of services in Britain's productivity performance between the middle of the nineteenth century and the end of the twentieth century, with particular emphasis on how Britain compared with the United States and Germany. This is a vital missing part of most accounts of comparative productivity performance over the long run, since the overtaking of Britain by the United States and Germany cannot be explained by changing comparative productivity performance in industry, which has been surprisingly stationary over the last century and a half (Broadberry, 1997a, 1998).

A central part of the story involves the ‘industrialisation’ of market services, and the extent to which Britain was able to adapt to the technological and organisational changes that underpinned it, many of which originated in the United States. This involved the transition from customised, low-volume, high-margin business organised on the basis of networks to standardised, high-volume, low-margin business with hierarchical management. To the extent that some services remained unsuitable for industrialisation, Britain was able to retain a strong productivity position, even relative to the United States, and this helps to explain the moderate nature of Britain's relative economic decline. Nevertheless, Britain had already been overtaken by the United States in services, as in the economy as a whole, by the 1890s.

To the extent that conditions were even less favourable to the industrialisation of services in Germany before World War II, largely as a result of the much larger agricultural sector and the associated lower levels of urbanisation, Britain was able to retain a productivity lead over Germany.