UK Productivity Commission Priorities for 2023
Over the next three years, The UK Productivity Commission will hold evidence sessions that focus on specific policy issues. This report sets out what the policy priorities are for 2023, as we focus on investment.
19 January, 2023
Some Questions for 2023
- What are the frictions or rigidities that have delayed or prevented capital deepening, particularly since the global financial crisis?
- Specifically, how difficult has it been to finance investment projects through bank finance, equity or debt?
- To what extent has business demand for capital, driven by uncertainty or poor prospects for economic growth, played a significant role?
- How important is public investment in fostering growth? Does it drag growth down with the prospect of higher taxes or provide the basis for the better functioning of the market economy?
- Might public investment also interact and support strategic priorities and address spatial imbalances (in the short, medium, long term)?
- What exactly has been the contribution of intangible capital as a replacement or complement for physical capital?
- What policy responses do we need to increase returns on investment, potentially across the six capitals identified in the Levelling Up White Paper (physical; intangible; human; financial; social; and institutional)?
The uncertainty regarding future terms of trade for UK businesses after the country left the EU single market certainly contributed to curbing the short-lived rebound in business investment that preceded 2016. However, it is hard to blame Brexit for what is essentially a structural feature of the UK economy. And the structural determinants of investment that relate to key productivity-enhancing components of investment (e.g. intangibles, public investment, ICT capital, R&D, venture capital) all need to be examined.