UK near bottom of OECD rankings for national investment

New analysis published today (Sunday) by the TUC reveals that the UK ranks close to the bottom of OECD countries for economic investment.

In total, UK capital investment was 16.8% of GDP in 2016, while the average across all OECD countries was 21.5%. On this basis the UK is in third to last place, ranking 34^th out of 36 countries, trailed only by Portugal and Greece.

Investment across areas of the economy

In every investment category, the UK ranks below the OECD average.

The UK’s worst ranking is 33^rd out of 35 countries for investment in ‘machinery and equipment’. The TUC says that this reflects small size of the UK’s manufacturing industry compared to other nations – a problem that has hampered the supply of good quality, skilled jobs.

Despite Britain’s shortage of housing supply, the UK is still below average for investment in dwellings (20^th out of 34 countries). The TUC says that if the government increased funding for it public house building programmes, rather than subsidising home loans, UK investment in dwellings would be more likely to increase.

Government and private investment

The problem of low investment runs across both government and business. For private sector investment, the UK ranks 27^th out of 30 countries. And for public sector investment, the UK ranks 24^th out of 32 countries.

At 2.6 % of GDP, UK public investment is some way below the 2016 OECD average of 3.2%. Future government spending plans will increase this to just 2.8%, improve the UK ranking by only one position.

The TUC is calling for public infrastructure investment to be increased by around £20 billion annually to catch up with the UK’s competitors and reach the OECD average.

Investment and Brexit

The TUC has previously warned that failure to improve UK investment would leave Britain at greater risk from the challenges of leaving the EU. In November 2016, TUC General Secretary Frances O’Grady said: “We can’t just waltz into Brexit with our fingers crossed. If the government doesn’t invest in Britain it could go very badly wrong.”

The TUC is concerned that the government has failed to make the necessary increases to UK investment in the two years since, and warns that the risks will be greater if the Prime Minister fails to negotiate a Brexit deal that protect jobs and trade. The best way to achieve this is a deal that retains the benefits of being a member of the single market and customs union.

TUC General Secretary Frances O’Grady said:

“The government has left Britain sat at the back of the grid with a rusty engine and a half-empty tank. We won’t lead the global race like that. And we can’t create the better jobs we need if we don’t invest in our infrastructure.

“Most parts of Britain are crying out for faster transport links, affordable homes and clean energy. Our public services need rescuing from a devastating decade of cuts. And the UK economy needs to be ‘match fit’ for Brexit.

“We need a National Investment Bank to pull in private finance and rebuild Britain for the 21^st Century. It must have a remit to target towns and communities that most need new industry and better jobs.

“And the government must match the level of public investment in other nations. We need world-class transport and public services for thriving communities that create and attract new businesses.”