Investment hopes dashed

Julian Harris
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BUSINESS investment in the UK is unlikely to bounce back at the rate that the government’s fiscal watchdog expects, according to City analysis of data released yesterday.

The profitability of non-financial corporations – measured as the net rate of return on capital – fell to 11.5 per cent at the end of last year, down from 12.1 per cent in the third quarter of 2012.

The Office for National Statistics figures do not bode well for the UK, said Citigroup’s Michael Saunders.

“With profitability weakening and sluggish demand, we doubt that business investment will recover as much over coming years as the Office for Budget Responsibility expects,” he said.