Figures showing Britain has the worst investment levels in the G7 should “ring alarm bells” in No 10, critics have said.
The UK was at the bottom of the table behind the US, France, Germany, Italy, Japan and Canada, with public and private investment just 18.6 per cent of GDP in the three months to September, latest figures show.
Business groups warned the situation was also likely to get worse later after April, when a series of changes announced in Rachel Reeves’ Budget, including changes to business rates and a rise in the living wage, come into effect.
In response, one Labour MP accused the chancellor of driving down business investment with “broken commitments”.
Across the G7, Japan had the highest investment levels at 27 per cent, Italy and Canada were on 23 per cent, France 22 per cent, the US 21 per cent and Germany 20 per cent, according to the Office for National Statistics, which cited figures from the Organisation for Economic Co-operation and Development.
As the Labour government scrambles to secure growth in the economy it has promised billions of pounds worth of government investment over the next four years on projects ranging from transport to housebuilding.
But the data suggests a hoped-for major boost in private investment has failed to follow these announcements.
According to economists at PwC, public investment will rise by £13 billion in 2026–27, the biggest two-year increase since the financial crisis in 2008. However, private investment “will stagnate due to weaker business sentiment and lower profit growth”, according to Barret Kupelian, PwC’s chief economist.
Labour MP Graham Stringer put pressure on the chancellor over the figures, telling the Times: “No economy can succeed when hobbled by the highest energy costs to industry and commerce in the developed world.
“Until the chancellor deals with energy, everything else is second order, but the uncertainty she has created around family businesses and broken commitments on tax has made businesses reluctant to invest.”
Sir Mel Stride, the shadow chancellor, said “being bottom of the G7 for investment should ring alarm bells in Downing Street”.
Shadow Treasury minister James Wild said in a post on X that ordinary would “suffer” as a result of a PM “with no plan and no backbone”.
Reform’s Richard Tice said wealth creators were being driven away, as he pointed to citing the pharmaceutical giant Merck scrapping plans for a £1 billion research centre in the UK.
Meanwhile, Craig Beaumont, executive director of the Federation of Small Businesses, said that business sentiment was now “closer to dismay than confidence”.
“Pressure is building up against investment and growth in 2026. April will see huge cost hikes put on small businesses across the board: energy standing charges will rise, employment costs will rise, business rates bills will rise,” he said.
“To keep more businesses viable and unlock confidence, investment and growth, the government must have an answer to these at the spring forecast.”
In response, the government said: “Unlike previous governments, we are investing in our economic future, with over £120 billion more in capital investment compared with previous plans and the highest level of public investment for 40 years.
“We have also changed the fiscal rules so we can prioritise investment alongside the private sector. As a result, the national wealth fund has invested almost £4 billion, leveraging more than £5 billion in private investment and creating nearly 12,000 new jobs, helping to raise living standards in every part of the country.”
