Britain is set to avoid falling into “secular stagnation” – low inflation and interest rates holding back investment in advanced economies – according to forecasting group the EY Item Club.
The think tank has reported that business investment in the UK has performed relatively strongly since the economy emerged from recession at the end of 2009.
Following a sharp fall of almost 20 per cent during the financial crisis, investment by UK firms reached 11 per cent of GDP in the second quarter, the highest level since the end of 2000, the report claims.
There has been speculation from economists since the 2008 financial crisis that companies are shying away from spending in advanced economies, causing slower GDP growth.
Martin Beck, senior economic adviser to the EY Item Club, said: “Contrary to the fears of some economists that the global economy is heading towards secular stagnation, we are confident that the UK will avoid this threat. UK business investment has performed impressively in recent years, substantially outgrowing other components of GDP since 2010.”