UK’s Investment Lag: Analysis Highlights Low Business Investment in G7

The UK has consistently had the lowest investment levels among G7 countries for most of the past three decades, according to research by the Institute for Public Policy Research (IPPR). Utilizing data from the Organisation for Economic Co-operation and Development (OECD), the study revealed that new investment inflows into the UK have been the lowest among the world’s leading economies for three consecutive years.

In 2022, private business investment in the UK was lower than in any other G7 country, which includes the US, Canada, France, Germany, Italy, and Japan. The UK also ranked 28th out of 31 OECD countries for business investment last year. The last time the UK had an average level of total investment within the G7 was in 1990. Had the UK maintained this average position over the past 30 years, it would have attracted an additional $2.4 trillion in investment.

This lack of investment indicates that the UK is failing to attract business investments proportionate to its GDP compared to its international counterparts. Total investment from government, corporations, and households has also been weak, contributing to the country’s poor economic performance.

Dr. George Dibb, who is the associate director for economic policy at IPPR, emphasized the critical role of investment in driving economic growth, likening it to fuel for an engine. He pointed out that inadequate investment is a major factor behind the UK’s low productivity and living standards, stressing the need for substantial investment to boost economic performance.

The IPPR suggests that the UK can boost business investment by implementing a green industrial strategy that removes growth barriers, provides regulatory certainty, and addresses coordination issues across the economy. Preliminary data for 2023 shows a slight improvement, with the UK’s level of private investment surpassing that of Canada. As the UK approaches a general election, political parties are making economic growth a key part of their platforms.

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