Business invest more under Labour – as new analysis shows UK falling behind international competitors

Ahead of the G20 summit, new analysis by the Labour Party based on figures from the IPPR has shown businesses invest more under Labour, with business investment higher as a proportion of the economy.

Britain attracted more investment from businesses under Labour than under the current Conservative government. Annual business investment as a proportion of GDP was 10% higher under Labour (1.1 percentage points), equivalent to £25 billion more investment each year in today’s prices.

Analysis also shows the UK slipping behind international competitors under the Conservatives. Had the UK matched the investment rates of the United States, Germany or France, Labour finds that there would be £28 billion, £62 billion and £81 billion more investment into the British economy every year, respectively.

As part of its mission to have the highest sustained growth in the G7, Labour has a plan to bring business investment back into Britain, with a modern industrial strategy that will give investors confidence in Britain and its ambitions under Labour. The Green Prosperity Plan will use public investment in the industries of the future as a catalyst, crowding in business investment in areas such as renewable energy, electric battery manufacturing and carbon capture and storage.

After 13 years of economic mismanagement, the UK's attractiveness for business investment compared to international competitors has collapsed in the rankings. According to the Party’s analysis, all G20 countries with available data had higher rates of business investment than the UK. This poor record has been a key driver of the UK’s poor productivity levels and, subsequently, economic performance.

This situation has been exacerbated by the chaos overseen by the Conservatives in recent years that saw four chancellors and four business secretaries in 2022, as well economic turmoil from their kamikaze budget last autumn.

Jonathan Reynolds MP, Labour’s Shadow Business Secretary, said:

“Britain is a great place to start and grow a business. But, after 13 years of failure from the Conservatives, business investment is the lowest in the G7 and international competitors are overtaking us.

“A Labour government will bring more investment and jobs to Britain. Our plans will build gigafactories and wind turbines, see more start-ups scale up, and revive local high streets bringing wealth and opportunity back to every part of the country.

“It’s clear only Labour can deliver the hope, opportunity and stability British business needs to thrive.”

Ends

Notes to editors:

• Analysis based on international investment comparisons compiled from an original OECD database by the IPPR for this report - link 
• GFCF is treated as equivalent to investment and GFCF by corporations, treated as private sector investment.
• UK GDP in chained volume measure (seasonally adjusted) - ONS

Gross Fixed Capital Formation (GFCF) by corporations as a percentage of GDP

Gross Fixed Capital Formation (GFCF) by corporations as a percentage of GDP

* latest available data