Cover of MoneyWeek magazine issue no 668

On the way up

29 November 2013 / Issue 668

The nations becoming friendlier to investors


  • Britain's big problem: executive pay
  • Should the state give everyone a minimum income?
  • Nigeria's answer to Oprah Winfrey


Merryn Somerset WebbEDITOR'S LETTER

Merryn Somerset Webb

Why aren’t firms investing?

There’s a problem with Britain’s recovery. Everyone knows what it is. While overall GDP growth has been just fine, investment has not. Private-sector investment in the year to mid-2013 was a mere 13.7%.

That’s the lowest since the mid-1950s. Take out depreciation, says Liam Halligan in The Daily Telegraph, and it’s down to 2.4%. That’s a “disgrace”. Worse, it shows no signs of picking up.

As Patrick Hosking points out in The Times, it even fell by 2.7 percentage points from the first quarter of the year to the second. “When it comes to forking out for new premises, plant, machinery, intellectual property or IT systems”, it seems that British business is “parsimonious in the extreme”.

This matters. Only real investment in the kind of things that drive wealth over the long term can give us long-term growth (buying and selling houses to each other, just to be clear, can’t). So why aren’t companies investing?

• Read the full editor’s letter here: Why aren’t firms investing?