Why UK Business investment is poised to pick up

We think improving profitability and falling interest rates will underpin a gradual pickup in UK business investment. But this follows a decade over which capital spending has flatlined and even if our forecast proves accurate, it would still leave the UK well behind peers like the US.

What you will learn:

• The weak post-pandemic recovery so far is largely due to a shortage of internal finance and a sharp increase in borrowing costs. Investment in buildings has been particularly weak, with changing working patterns compounding the impact of higher raw material costs and interest rates.
• Still, the experience of the recent hiking cycle suggests cuts to policy rates will pass through quickly to corporate interest rates. Meanwhile, small firms have deleveraged significantly after a sharp rise in debt levels during the pandemic, and are now in better shape to borrow again.
• But corporate sentiment is fragile. There’s an onus on the government to deliver a more stable political backdrop that could give firms the confidence to commit to projects.

If you missed our recent UK Budget reaction webinar (1 November) register to watch here