UK Investment Lagging Behind G7 Countries, IPPR Warns

Investment in the UK has fallen behind the rest of the G7 countries since the 1990s, according to new research from the Institute for Public Policy Research (IPPR).

Ahead of planned potential cuts from the Conservatives or Labour candidates, should they be elected on July 4^th, the IPPR urged the incoming government to rethink its approach to investment in the UK to avoid falling further behind.

The IPPR called for the next government to ‘lead from the front by designing and delivering high-quality public investments to crowd in public sector funds.’

Analysis from the thinktank revealed that the UK ranked last in G7 investment in 24 of the past 30 years, based on data from the Organisation for Economic Co-operation and Development (OECD).

The lack of spending by UK companies on technology and innovation over the last three decades is a major factor in this underperformance, with public sector investment also ranked below the G7 average.

Responding to the findings, Michael Thornton, senior director, public sector at Investigo, part of The IN Group, said: “Potential investment cuts, against the backdrop of the UK lagging behind the G7, is a concerning sight for UK public services and economic growth. Public services continue to lag behind the European market and do not appear to provide a good return on an all-time high taxation burden, so the incoming government must put a clear focus on improving public sector efficiency, especially if cuts are due.”

“Staffing is a good starting point for the incoming government to boost the efficiency and productivity of public services, taking a smarter approach to interim versus consultancy staff. A sizable portion of public sector work is carried out on a project basis, requiring specialised skill sets. By taking a more intelligent approach and focusing more on the right skills and staff for each project, departments can streamline the delivery of services while also keeping costs down.”

Overall, IPPR analysis reveal that the UK ranked 28^th out of 31 OECD countries for business investment, with Slovenia, Latvia and Hungary attracting higher levels relative to their economics.

Among OECD countries, only Greece, Luxembourg and Poland ranked lower than the UK for business investment during the past three years.

Libero Rapsa, Director of adesso UK, commented: “Investment should be the cornerstone of innovation and a thriving economy, so the IPPR’s research indicating that the UK is lagging in this area is concerning. Technology, particularly AI, should be central to enhancing efficiency, and investment is crucial for successful tech projects that boost productivity and growth nationwide.”