“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.”
As well as ranking last among the G7, the IPPR report also found that the UK now ranks twenty-seventh out of the 30 OECD countries for business investment. Britain is now worse for investment than every other developed economy apart from Poland, Luxembourg, and Greece.
The report is likely to raise concerns about high taxes and red tape strangling British businesses and holding back the economy.
Gerard Lyons, a strategist at Netwealth and a former economic advisor to Boris Johnson, said “serious and targeted tax reforms” were needed to arrest the decline, adding that it was a more sustainable approach than ramping up public spending.
He said: “A lack of business investment is nothing new to the UK economy. The UK had the lowest average business investment of all OECD nations between 1995 and 2015. This is partly because for a long-time we have had a notably unattractive approach to capital cost recovery – namely, the ability of firms to write off investment against tax.
“The Chancellor has attempted to address this with measures such as full expensing [tax relief], but any changes need to be permanent for them to change business behaviour in the long-term.”
Prime minister Rishi Sunak has come under fire for increasing the headline rate of corporation tax from 19pc to 25pc from April this year.
BT, the FTSE 100 telecoms giant, said the move would send the UK in a “drastically anti-investment direction”, adding that the country was hurtling towards a “cliff edge deterioration in the tax environment for investment”.
Sir James Dyson criticised the Tories’ “short-sighted” and “stupid” approach earlier this year in an article for the Telegraph, arguing that the Conservatives seem to think “penalising the private sector is a free win at the ballot box”.
