Business investment growth in UK is less than half pace of US

{"text":[[{"start":7.05,"text":"Business investment in the UK has grown by less than half the pace of the US since 2019, highlighting a widening divergence between the two countries in a key driver of productivity and economic growth."}],[{"start":19.65,"text":"Preliminary figures published alongside GDP data on Thursday showed that UK business investment was up 11 per cent in the first quarter of this year compared with Q4 2019, before the pandemic, according to official data. This is less than half the pace of the 28 per cent rise in US non-residential private domestic investment over the same period, with AI being a driver of capital spending. "}],[{"start":43.849999999999994,"text":"This comes as new figures published on Sunday by the accountancy and advisory firm BDO showed that UK midsized businesses had paused investment plans because of the impact of the war in Iran."}],[{"start":56.349999999999994,"text":"In the year to the end of the first quarter, UK business investment was down 1.8 per cent. In the US it was up 5.8 per cent, helped by AI-related 10 per cent annual growth in intellectual property and a 24 per cent increase in information-processing equipment, official data showed. "}],[{"start":75.3,"text":"UK figures are highly volatile and often revised, but the contrast with the US is stark. After five years of stagnation following Brexit and the pandemic, in 2026 UK business investment was only 11 per cent above its level in the first quarter of 2016, compared with growth of 52 per cent in the US."}],[{"start":null,"text":"

"}],[{"start":95.69999999999999,"text":"“Investment should be a bet on future growth,” said Fhaheen Khan, economist at manufacturers’ group Make UK. “However, the UK is an outlier in the OECD for its under-investment on capital expenditure in the last decade, particularly in modern technologies like robotics and automation, where for many reasons we continue to exhibit slower adoption rates compared to similar countries.” "}],[{"start":119.39999999999999,"text":"Last month, the OECD singled out low growth in business investment as a reason for the UK's weak productivity and “sluggish” growth in GDP per capita. It urged Britain to improve labour mobility and participation, including enhancing skills and simplifying the tax system."}],[{"start":136.45,"text":"Surveyed by BDO over the four weeks to May 11, 60 per cent of executives in UK businesses with £10mn to £500mn in revenue said they intended to halt or reduce investment as they waited for the situation in the Middle East to stabilise. The figure rises to 69 per cent in retail and tech, and 67 per cent in financial services. It follows warnings by the Bank of England of falling business investment in the first half of the year. "}],[{"start":166.45,"text":"OECD standardised figures showed that private non-residential investment was expected to grow more than four times as fast in the US as in the UK over the decade to 2026, and faster than in any other G7 country with available data. "}],[{"start":null,"text":""}],[{"start":182.04999999999998,"text":"The OECD data also showed that total investment, private and government, in intellectual property grew at least twice as fast in the US as in the UK, Italy, Germany, France and Canada, in the six years to Q4 2025. "}],[{"start":196.39999999999998,"text":"“Clearly, US investment is being boosted by the IT sector, and while investment in intellectual property in the UK has been reasonably strong of late, it is no match for the US,” said Peter Dixon, economist at the National Institute of Economic and Social Research."}],[{"start":211.04999999999998,"text":"While UK companies are adopting AI technologies, “the UK simply does not have the scale — either in the size of its market, the depth of its capital markets, or the concentration of firms with world-leading technical expertise — to finance and commercialise investment in frontier technologies to anything like the same degree”, he added. "}],[{"start":230.04999999999998,"text":"The Labour government last year set out a 10-year industrial strategy focused on sectors such as life sciences and advanced manufacturing, designed to boost economic growth, investment and resilience. "}],[{"start":242.45,"text":"But the political backdrop has recently become more uncertain, with Prime Minister Sir Keir Starmer facing a possible leadership challenge after a dire set of local election results. "}],[{"start":254.5,"text":"While UK business investment rose in 2025, much of the increase was concentrated in utilities. Investment in electricity, gas and water infrastructure “is sorely needed”, said Sandra Horsfield, economist at Investec, “but this is not the type of investment that can yield the step up in potential GDP growth that would transform economic prospects”."}],[{"start":275.9,"text":"The contrast with the US, where spending had focused heavily on infrastructure and software linked to the AI rollout, “suggests there is scope for the productivity gap to widen even further”, she added."}],[{"start":null,"text":""}],[{"start":286.75,"text":"Make UK estimated that increasing investment intensity by 0.5 per cent a year until 2035 would add £670bn in combined public and private investment and help narrow the productivity gap with the US."}],[{"start":302.65,"text":"The low level of total UK investment relative to the size of its economy “is a big part of Britain’s productivity story”, said Scott Corfe, director in the economics practice at Public First, a UK-based policy consultancy. "}],[{"start":316.7,"text":"This matters because “ultimately, if the thing we really worry about is living standards and earnings and pay, you need productivity to back up that pay growth”."}],[{"start":333.55,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1779076533_5254.mp3"}