The 1998 White Paper 'Our competitive future: building the knowledge based economy' (CM 4176 ISBN 0101417624) proposed a ten year programme to enable the UK to close the productivity gap by exploiting the potential benefits of a modern knowledge driven economy. More than six years on, this report is a review of the progress that has been made. The topics covered include: UK performance since 1998; the development of new products, processes and services; science and knowledge research bases; knowledge transfer and exploitation; information and communication technologies, competition from low-cost economies. One of the conclusions is that although the UK's science and knowledge research bases and businesses are collaborating more frequently, the performance in knowledge exploitation has been disappointing and the relative position of the UK against the rest of the G7 has remained unchanged. Another conclusion is that although there is some evidence that outsourcing abroad can be beneficial, the Government should keep the trend under review in case there are strategic loses.