Enhancing Business Investment in the United Kingdom
Selected Issues Papers, July 13, 2023
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- Enhancing Business Investment in the United Kingdom
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Bibliographic details
- Authors: Agnese Carella, Ruo Chen, Xiaobo Shao
- Published: July 13, 2023
- Series: Selected Issues Papers
- DOI: https://doi.org/10.5089/9798400249099.018
Executive summary and main findings
- The paper analyzes aggregate investment trends in the United Kingdom (UK) and other G7 peers, and investment drivers for UK firms.
- Data show that business investment has been structurally low in the UK.
- Low business investment is likely the key driver of the UK’s relatively weaker growth performance since the middle of the last decade.
- Econometric investigations confirm:
- a negative impact of Brexit-related uncertainty,
- the importance of financing constraints on firms,
- a complementary role for public capital.
Analytical approach
- Comparative analysis of UK and other G7 peers’ aggregate investment trends.
- Firm-level investigation of investment drivers for UK firms.
- Econometric investigations to identify causal impacts (Brexit-related uncertainty, financing constraints, public capital complementarity).
Policy-relevant implications (as presented)
- Addressing Brexit-related uncertainty could mitigate negative effects on business investment.
- Alleviating financing constraints for firms could support higher private investment.
- Public capital appears complementary to private investment and may bolster business investment when appropriately targeted.
Publication and metadata
- Title: Enhancing Business Investment in the United Kingdom
- Authors: Agnese Carella, Ruo Chen, Xiaobo Shao
- Date: July 13, 2023
- Series: Selected Issues Paper No. 2023/050
- Issue: 050
- Volume: 2023
- Pages: 16
- DOI: https://doi.org/10.5089/9798400249099.018
- Stock No: SIPEA2023050
- ISBN: 9798400249099
- ISSN: 2958-7875
- Subjects: COVID-19, Expenditure, Financial markets, Health, International organization, Market capitalization, Monetary policy, National accounts, Private investment, Public investment spending
- Keywords: Brexit, Business investment, capital, COVID-19, econometric investigation, Global, growth, importance of financing constraint, investment decision, investment driver, macro investment model, Market capitalization, Private investment, Public investment spending
Source: Enhancing Business Investment in the United Kingdom, Selected Issues Papers (2023) by Agnese Carella, Ruo Chen, Xiaobo Shao; published July 13, 2023; DOI: https://doi.org/10.5089/9798400249099.018.
Content in this bundle
- There are both conjunctural and structural reasons to focus on business investment in the UK