The disappointing picture of business investment

| Publication date: 15 Apr 2019 | Theme: Macroeconomics | NIESR Author(s): CLenoel

This is a preview from the National Institute Economic Review, May 2019, no 248. Sustained low investment constitutes a major area of concern for the UK economy, with consequences for living standards in the longer term. In this box, prepared by NIESR Senior Economist Cyrille Lenoel, we review the latest data and discuss what has made the United Kingdom a less attractive place to invest in the midst of Brexit uncertainty.

 

"The level of business investment in the last quarter of 2018 was about 13% less than an extrapolation of the 2010–16 trend would have predicted. The UK picture also compares unfavourably to other advanced economies as the UK is the only G7 country where business investment is estimated to be declining. Even in the rather favourable modal scenario of a soft Brexit where the UK retains a very close trade relationship with the EU, we expect no rebound in business investment this year: we forecast ¼% growth for 2019 as a whole, reflecting the likely persistence of uncertainty, and the Bank of England forecasts a fall by ½% for each of the first three quarters of 2019 (Bank of England, 2019)".

 

 

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