- Decades of underinvestment by government and business have left Britain’s economy in a growth “doom loop,” according to the IPPR.
- Research from a center-left think tank estimates that the U.K. has contributed $500 billion ($638 billion) less to business investments than did other comparable wealthy countries.
- “The U.K. is in an investment and growth doom loop. Chronic under-investment, public and private, is delivering stagnating growth and a struggling economy,” Luke Murphy, IPPR associate director, said.
Decades of underinvestment by the government and businesses have left Britain’s economy in a growth “doom loop,” according to the U.K.’s Institute for Public Policy Research.
Underinvestment In Infrastructure
New research from a center-left think tank estimates that the U.K. has contributed $500 billion ($638 billion) less to business investments than did other comparable wealthy countries. The half-a-trillion-pound spending shortfall ranks the U.K. behind all other G-7 countries, and puts it 27th out of the 30 OECD nations, with only Poland, Luxembourg and Greece investing less. The IPPR said that U.K. underinvestment in infrastructure, research and development, skills and training had spanned several decades and successive governments, dating back to 2005.
In order to stay at the G7 average from that time, private sector investment since then would have to have been $354 billion higher in real teams, while public sector investment should have been $206 billion more. “The U.K. is in an investment and growth doom loop. Chronic under-investment, public and private, is delivering stagnating growth and a struggling economy,” Luke Murphy, associate director for energy and climate at IPPR, said.
Higher Living Cost
The U.K. is on course to be the second worst-performing of all G7 economies this year after Germany, according to the International Monetary Fund’s latest growth forecast. It comes as higher living and lending costs continue to dampen consumer spending, while Brexit uncertainty weighs on business sentiment. The IPPR said further public investment could bolster business confidence and cause the private sector to “crowd in” with additional spending, likening the behavior to the Biden administration’s Inflation Reduction Act.
“If the economy is the engine of a country, investment is its fuel. But the UK’s tank is running on empty and it’s harming economic growth, driving inequality, and slowing progress towards net zero and energy security,” George Dibb, associate director for economy at IPPR, said.
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Source: CNBC
