Author Description

The paper addresses the issue of weak business investment in the United Kingdom (UK) by analyzing aggregate investment trends in the UK and other G7 peers, and investment drivers for UK firms. Data show that business investment has been structurally low in the UK, and 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, and a complementary role for public capital.