IPPR report

Growth held back by low investment says think tank

Businesses need the conditions to invest says the IPPR

Investment in the UK is not keeping pace with the world’s richest nations and is a brake on growth, according to a think tank.

The Institute for Public Policy Research (IPPR) said total UK government investment is “significantly” behind the nearest competitor in the G7 group.

Its data has emerged as the Conservatives and Labour plan to reduce government investment over the next parliamentary term.

The IPPR says the new government needs to develop an longer-term industrial strategy and review “self-imposed” spending rules to provide the conditions for private sector investment.

“If the economy is an engine, then investment is its fuel,” said Dr George Dibb, associate director for economic policy at the organisation..

The IPPR notes that data from the Organisation of Economic Co-ordination and Development (OECD) shows that the UK has had the lowest level of investment in the G7 for 24 of the past 30 years.

The UK sits at the foot of the G7 investment table (with investment at 11.3% of national income), “significantly” behind the US with 21.2%, the next worst performer.

This is blamed for low procuctivity which in turn is holding back living standards, says the IPPR..

Dr Dibb added: “Without resources flowing into new investment, it’s hard to see how UK economic performance can improve.”

Rachel Reeves, who is expected to become Labour Chancellor, has promised to create better conditions for investment and on Monday hosted a British Infrastructure Council with some of the biggest British and international investors.

She has announced a £7.3bn National Wealth Fund to “invest in steel, ports and “re-industrialise” Britain which includes investment in steel, ports and gigafactories.

The Conservatives say that tax breaks are available for companies to invest and that £36bn from the truncated HS2 high speed rail line will be diverted into local road, rail and bus projects.

The party also wants to cut back on legacy European Union red tape which it blames for slowing down infrastructure development.

The Scottish National Party said it would offer “a route back to prosperity in the European Union.”

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