Investment hits 60-year low as firms hold back on expenditure

THE UK’s investment dipped to the lowest level seen since in around 60 years during the second quarter of this year, in comparison to the size of the British economy.

Despite the apparent beginnings of an economic recovery, business investment is still anaemic. The Office for National Statistics (ONS) referred to “the lowest recorded level since the 1950s”.

According to the ONS yesterday, investment as measured by gross fixed capital formation sat at 10.4 per cent in the first and second quarters of this year.

Investment has fallen from13.5 per cent in 2007,before the financial crisis, while the average level of investment across the advanced G7 economies stands at 14.6 per cent.

The statistics add to criticisms that the current boost to growth has been built more on household spending, which has risen marginally since 2011.

Household expenditure made up 46.5 per cent of GDP in the second quarter, against a low of 46 per cent in the third quarter of 2011.

Deloitte’s most recent survey of chief financial officers revealed a growing appetite for risk, suggesting that business investment may begin to rise.