UK Economy Slumps Versus G7 Peers

The UK's economy is stuck in a growth "doom loop" from decades of insufficient investment by both the government and businesses, says the Institute for Public Policy Research (IPPR). 

According to the think tank, the UK has contributed $500 billion less to business investments compared to similar wealthy countries.

This massive spending shortfall puts the UK behind all other G7 nations and ranks it 27th out of 30 OECD countries. Only Poland, Luxembourg and Greece have invested less. 

The IPPR highlights that the underinvestment in infrastructure, research and development, skills and training has lasted for several decades and has been a result of the negligence of successive governments dating back to 2005.

To align with the G7 average since then, private sector investment should have been $354 billion higher, while public sector investment should have been $206 billion greater. 

The UK is projected to be the poorest-performing economy among the G7 nations this year, with the International Monetary Fund forecasting a 0.3% overall contraction in Britain's GDP.

This situation is exacerbated by the impact of rising living and lending costs, which have dampened consumer spending, and the lingering uncertainty surrounding Brexit, which continues to weigh on business sentiment.

Analysts expect the gradual loss of competitiveness by the UK versus peer nations to seep into the performance of its top companies in the coming years if measures are not taken to reenergize the country’s competitiveness.