UK investment expenditure hits 1950s low

The Office for National Statistics' (ONS) monthly Economic Review reiterated that the economy grew by 0.4 per cent in July and output is now 1.5 per cent higher than at the beginning of the year. (Release)

But the October report also highlighted the surprising fact that the total expenditure accounted for by spending on investment has fallen to the lowest level since the 1950s.

Recent growth for the UK, the ONS said, has been concentrated in household expenditure rather than in investment. The proportion of total expenditure accounted for by spending on investment has fallen from an average of 13.5 per cent in 2007, to an average of 10.9 per cent during 2012 and to 10.4 per cent in the second half of 2013. Investment accounts for an average of 14.6 per cent of Gross Financial Expenditure in the G7, with the UK's 10.4 per cent compares with 14.1 per cent in France, 16.7 per cent in the United States and 17.9 per cent in Canada.

The graph above shows, in real terms, the proportions of Gross Final Expenditure accounted for by gross fixed capital formation and household expenditure since 2007.