Decades of underinvestment by government and business have left Britain’s economy in a growth “rut”, according to centre-left think tank IPPR.
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Decades of underinvestment by government and business have left Britain’s economy in a growth “rut”, according to Britain’s Institute for Public Policy Research.
New research from a centre-left think tank estimates that the UK contributed $US500 billion ($638 billion) less to business investment than other comparable rich countries.
The half a trillion pound spending deficit puts the UK ahead of all other G-7 countries and places it 27th out of 30 OECD countries, with only Poland, Luxembourg and Greece investing less.
The IPPR said the UK’s underinvestment in infrastructure, research and development, skills and training had spanned several decades and successive governments, starting in 2005.
To remain at the G7 average from that time, private sector investment would have to be $354 billion higher in real teams since then, while public sector investment would need to be $206 billion higher.
“The UK is in an investment-growth loop. Chronic underinvestment, both public and private, is delivering stagnant growth and a struggling economy,” said Luke Murphy, deputy director for energy and climate at the IPPR.
Separate studies published on Tuesday, the IMD ranked the UK behind other major economies for its global competitiveness, particularly in economic performance and trade efficiency.
A UK government spokesman did not immediately respond to CNBC’s request for comment on the findings.
But the right-wing Conservative Party, which has been in power for 13 years, said increased business investment, including a package of tax breaks announced in the spring budget and additional spending on technology and green energy, would help boost the economy.
The UK is on track to be the best-performing G7 economy this year, according to the International Monetary Fund’s latest forecast, which suggests UK GDP will contract by 0.3% overall.
It comes as a higher life and the cost of the loan continues to dampen consumer spending, while Brexit uncertainty weighs on business sentiment.
The IPPR said additional public investment could boost business confidence and cause the private sector to “squeeze” with additional spending, likening the behavior to the Biden administration’s inflation-reduction bill.
“If the economy is the engine of the country, investment is its fuel. But Britain’s reservoir is empty and this is damaging economic growth, leading to inequality and slowing progress towards net zero and energy security,” George Dibb, deputy director of economics at the IPPR, said.
Opposition Labor Party — currently around 16 points ahead of the Tories in the opinion polls – said last week he would downsize his flagship green industry the promise of spending due to ever-rising interest rates.