Only Greece has a worse investment record than Britain since the turn of the century, a damning report has found.
The UK has missed out on almost £2tn of public and private investment over the past 26 years in housing, businesses and infrastructure, lagging behind the rest of the G7, according to Oxford Economics.
High taxes, unpredictable policy and expensive energy have all caused Britain to invest less than any other OECD nation, the economists found. Only Greece – which was undermined by a catastrophic sovereign debt crisis in the early 2010s – fared worse.
In every year since 2000, the UK has sat at, or near, the bottom of the G7 for the amount invested by both the public and private sectors. In 2025, the UK invested 18.9pc of GDP compared to an average of 22.5pc among the 38 OECD countries.
Had Britain invested at the average rate of the rest of the G7, total investment would have been £1.9tn higher by 2025.
The report said: “The consequences are visible in a productive capital stock that is now the smallest in the G7 relative to GDP – a shortfall that reflects in the size of the economy and in living standards.”
It suggests that Britain had a significant problem well before the ructions of the financial crisis, Brexit or the pandemic.
The Government has pledged to increase public sector investment, but the economists said this would not be enough by itself to put Britain back on a path to growth.
“A public pipeline, however ambitious, will deliver less than intended if the environment facing the private sector remains discouraging,” the report warned.
Budget opportunity
The airports and rail firms that commissioned the report said John Healey could begin to encourage investment in infrastructure by taking decisive action in his coming Budget.
They said that by cutting “sky-high” business rates the Chancellor could encourage long-term private investment in projects that would drive growth and boost competitiveness.
Pierre-Hugues Schmit, the chief executive of Gatwick Airport, said the Budget needed to head towards “a more stable and proportionate approach on key issues such as business rates and bring the policy certainty that we need”.
Gatwick’s annual business rates bill is set to jump in the next three years from around £40m to £90m.
Getlink, which manages the Channel Tunnel, said its business rates bill was set to triple, despite there being no change in the scale or nature of the infrastructure, nor the revenues it returned. The company has threatened legal action over the increase.
