WORKING PAPER - Investment in the UK: Longer term trends Authors:

In these latter cases, gross fixed capital formation has risen as a share of GDP but declined as a share of the industries’ own GVA, so the former increase reflects their growing share of the economy (while part of the manufacturing investment decline as a share of GDP is due to its shrinkage as a share of the economy). [...] Total investment: UK and G7 As a first step we ask: is the UK investment indeed low? The answer to this over time and in terms of benchmarking against comparable economies is set out in Figure 1: total investment in the UK is lower as a share of GDP than in other G7 economies and has been for much of the post- 1980 period; fell more sharply than in these other countries in the slowdown (in some ca. [...] Compared to its peers, in the late 1990s to the early 2000s, the UK saw the steepest decline in investment in this category, in which it continues to have the lowest level of investment in the G7 as a share of GDP. [...] As there was no recovery in UK manufacturing investment as a share of GDP in the last ten years, the larger decline in manufacturing’s share of GDP in the UK than elsewhere is evidently part of the story. [...] In the case of construction, the level is much higher than in the other countries, whereas it is at the low end of the pack in real estate, reflecting low investment in housing.