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In the News

Under-investment risks a growth "doom loop" for the UK Economy

Graham Watson

20th June 2023

The Institute for Public Policy arguably sums up the last 40 years: £500bn plus under-investment has resulted in low growth. It argues that British investment is the lowest in the G7 and 27th out of 30 in the OECD, ahead of only Poland, Luxembourg and Greece.

The solution? The IPPR argues that the government should be looking for public investment to "crowd in" private sector investment, giving confidence to companies investing in the UK. That said, is there much evidence for this?

The UK has one of the lowest capital investment to GDP ratios among leading high-income countries. Capital investment as a share of GDP was just 17% in 2022. In February 2022, the then Chancellor Rishi Sunak was quoted as saying “The lower level of capital investment we see by UK businesses ... is a pervasive economy-wide issue, it has been persistent for decades, and we must fix it to improve productivity, growth, and living standards.” In this new revision video we look at some of the causes and consequences of low capital investment in the UK economy.

Graham Watson

Graham Watson has taught Economics for over twenty years. He contributes to tutor2u, reads voraciously and is interested in all aspects of Teaching and Learning.

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