Overview
- Official figures for the three months to September put total UK investment at 18.6% of GDP, the lowest in the G7, continuing a pattern seen in 23 of the past 31 years.
- Economists expect growth over the next two years to be driven largely by the state, with Capital Economics forecasting 1.4% in 2025 and the CBI nudging its 2026 outlook up to 1.3% on higher public outlays.
- PwC projects public investment to rise by about £13 billion in 2026–27, the biggest two‑year increase since 2008, while warning that private investment is likely to stagnate due to weaker sentiment and profits.
- The government says it is lifting capital spending to a 40‑year high, has changed fiscal rules to prioritise investment, and cites nearly £4 billion deployed by the national wealth fund that has leveraged more than £5 billion in private capital and created about 12,000 jobs.
- Business groups and critics caution that higher costs and policy changes, including increases to the living wage and business rates and higher energy standing charges from 2026, could further damp private investment.