Summary of response
- The UK faces a structural shortfall in private investment when compared to other countries, resulting in a weaker capital stock.
- Data shows that UK investment into gross fixed capital formation is persistently lower than the rest of the G7.
- Despite deep and world-renowned financial markets, patient capital has not been made available to more innovative sectors of the economy, with a focus instead on low-risk assets.
- A lack of access to external finance, a persistent funding gap, and an overly complex research, development and innovation ecosystem, are holding back UK businesses from investing.
- Clear mandates from governments help to drive investment at scale.
- Countries that ensure public investment aligns to commercial activity and industrial priorities see higher rates of investment.
- The UK underperforms on SME support and direct finance, as well as technology extension and advisory services.
- The UK does not lack initiatives to support investment, but these are not as coherent, integrated, or accountable when compared to other nations. Adopting a more strategic, business-facing, and evidence-led approach would help close the UK’s persistent investment gap.
- The Government should push on with its recent Mansion House pensions reforms, to unlock new pools of institutional finance and ensure UK firms can access the capital they need.
- Scaling models of collaboration with universities can help to further de-risk investment for businesses.
- Simplifying the support landscape for businesses, particularly SMEs, should make it easier for companies to access support at different steps in their investment journeys.
- Enhanced and strengthened training for businesses can help improve investment readiness.
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