Worst investment levels in the G7 ‘should ring alarm bells in Downing Street’
Critics said figures showing the UK had the worst investment levels in the G7 at 10th should “sound alarm bells”.
According to the latest figures, the UK was at the bottom of the table behind the US, France, Germany, Italy, Japan and Canada, with public and private investment accounting for just 18.6 per cent of GDP in the three months to September.
Business groups have warned the situation is likely to get worse after April, when a raft of changes announced in Rachel Reeves’ Budget, including changes to business rates and a rise in the living wage, come into force.
In response, a Labor MP accused the chancellor of reducing business investment that “doesn’t deliver on commitments”.
According to the Office for National Statistics (ONS), citing figures from the Organization for Economic Co-operation and Development (OECD), Japan had the highest level of investment across the G7 with 27 percent, while Italy and Canada had 23 percent, France 22 percent, the United States 21 percent and Germany 20 percent.
The Labor government has promised billions of pounds worth of government investment in projects ranging from transport to housebuilding over the next four years as it seeks to secure economic growth.
However, data show that a hoped-for major increase in private investment failed following these announcements.
According to economists at PwC, public investment will rise by £13bn in 2026-27; This is the largest two-year increase since the financial crisis in 2008. But private investment “will stagnate due to weak business sentiment and lower profit growth,” according to Barret Kupelian, chief economist at PwC.
Labor MP Graham Stringer pressed the chancellor on the figures, saying: Times: “No economy in the developed world that is hampered by high energy costs for industry and commerce can be successful.
“Everything is on the back burner until the Chancellor deals with energy, but the uncertainty it has created around family businesses and the failure to meet tax commitments has made businesses reluctant to invest.”
Shadow Chancellor Sir Mel Stride said: “Being bottom of the G7 in terms of investment should ring alarm bells in Downing Street.”
Shadow Treasury secretary James Wild said in a post on X that ordinary people would “suffer” because of a “planless and spineless” Prime Minister.
Reform’s Richard Tice said wealth creators were being alienated, noting that pharmaceutical giant Merck had abandoned plans to establish a £1bn research center in the UK.
Meanwhile, Craig Beaumont, chief executive of the Federation of Small Businesses, said sentiment in the business community was now “closer to dismay than confidence”.
“The pressure against investment and growth is increasing in 2026. In April, small businesses will see major cost increases: energy fixed fees will increase, employment costs will increase, business interest bills will increase,” he said.
“The government needs to have a response to these in its spring forecasts to keep more businesses afloat and unlock confidence, investment and growth.”
In response, the government said: “Unlike previous governments, we are investing in our economic future, with more than £120bn of capital investment compared to previous plans and the highest level of public investment in 40 years.
“We have also changed fiscal rules to prioritize investment alongside the private sector. As a result, the sovereign wealth fund has invested almost £4bn, benefited from more than £5bn of private investment and created nearly 12,000 new jobs, helping to raise living standards in every part of the country.”
