Think Tank Report: Britain Comes in Last Place for Business Investment Among G7 Countries
The Institute for Public Policy Research has urged the government to ensure that UK businesses are a secure, sensible, and stable place to invest.
Britain has been reported to have the lowest rates of investment, including both businesses and government, among G7 nations, as highlighted by a think tank.
The Institute for Public Policy Research (IPPR) analysis indicates that without new investment, it is challenging to see how UK economic performance can improve.
This report comes at a time when the UK economy is slowly recovering from a technical recession that began at the end of the previous year.
Private sector investment in businesses in the UK ranked the lowest among all G7 nations for the third consecutive year, according to the IPPR. In comparison to 31 OECD countries, the UK placed 28th in terms of business investment.
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Slovenia, Latvia, and Hungary have been noted to attract higher levels of private sector investment as a percentage of GDP compared to the UK. The UK’s investment in factories, equipment, and innovation ranked higher than only Greece, Luxembourg, and Poland.
George Dibb, the associate director for economic policy at IPPR, commented on the findings, stating:
“If the economy is an engine, then investment is its fuel. The UK’s dire productivity performance is the single biggest driver of our dire living standards. Without resources flowing into new investment, it’s hard to see how UK economic performance can improve.”
The IPPR’s analysis also revealed that the UK struggles to compete with the G7 in total investment, which encompasses public, private, household, and not-for-profit investments.
The IPPR emphasized that the UK has consistently ranked at the bottom of the G7 list for investment levels over the past 30 years.
The think tank has called on the government to prioritize high-quality public investment in education, infrastructure, healthcare, and renewable energy industries to attract private investment and demonstrate the UK as a secure, sensible, and stable place for investment, according to Mr. Dibb.
Investment Pledges
This recommendation comes as the main political parties are actively campaigning ahead of the general election on July 4.
The Conservative Party, led by Rishi Sunak, has pledged to support small and medium-sized enterprises with a £4.3 billion business rates support package over the next five years. Additionally, they plan to invest £1.1 billion in the Green Industries Growth Accelerator to bolster the manufacturing sector.
Labor, on the other hand, aims to utilize public investment to attract private funding, primarily through their Green Prosperity Plan, which aims to create 650,000 jobs across Britain by 2030.
Labour leader Sir Keir Starmer has proposed capping the headline rate of corporation tax at 25 percent and increasing investment by nearly £5 billion per year by 2028-2029.
The IPPR noted that despite Labour’s commitment to investing £4.7 billion more annually compared to the current government, it still signifies an overall decrease in investment.
Conversely, the IPPR suggested that the Conservative Party’s current policies imply significant cuts to public investment post-election.
Earlier this month, the Confederation of British Industry (CBI) challenged the next government, regardless of party affiliation, to prioritize economic growth and business investments within the first 100 days of the new Parliament.
CBI Chief Executive Rain Newton-Smith emphasized that a new government can provide the necessary boost by prioritizing business investment and addressing labor and skills shortages.
Business leaders are looking for the government to deliver a compelling pitch to global investors, reaffirming the UK’s competitiveness and strengthening climate commitments.
