Fresh economic data has revealed a stark warning for the UK economy, showing the country has slumped to the bottom of the G7 league table for investment. The figures have ignited fierce political criticism and warnings from business leaders that confidence is plummeting.
G7 Investment League Table Paints Grim Picture
According to the latest Office for National Statistics analysis of OECD data, the UK's level of total investment—encompassing both public and private spending—stood at just 18.6% of GDP for the three months leading to September. This places Britain firmly at the back of the pack of leading industrialised nations.
Japan led the G7 with investment at 27% of GDP, followed by Italy and Canada on 23%, France on 22%, the United States on 21%, and Germany on 20%. The chasm between the UK and its peers has prompted immediate calls for action from political opponents and industry bodies alike.
Business Warnings and Political Fallout
Shadow Chancellor Sir Mel Stride declared that "being bottom of the G7 for investment should ring alarm bells in Downing Street." The criticism, however, has not been confined to the opposition benches.
Labour MP Graham Stringer turned his fire on his own party's Chancellor, Rachel Reeves. He told The Times that the economy was "hobbled" by high energy costs and accused Reeves of creating uncertainty. "The uncertainty she has created around family businesses and broken commitments on tax has made businesses reluctant to invest," Stringer stated.
Business groups echoed these concerns, predicting the situation will deteriorate after April 2026. A series of measures announced in the Chancellor's Autumn Budget, including alterations to business rates and an increase in the National Living Wage, are set to take effect then. Craig Beaumont of the Federation of Small Businesses said sentiment was now "closer to dismay than confidence" and warned of "huge cost hikes" on the horizon.
Public Push Fails to Spur Private Investment
The Labour government has pledged billions in public investment over the next four years, targeting areas from transport to housebuilding. Analysis by PwC suggests this will result in a £13 billion rise in public investment in 2026–27, marking the most significant two-year increase since the 2008 financial crisis.
Yet, this substantial public spending has not triggered the anticipated surge in private sector investment. Barret Kupelian, chief economist at PwC, warned that private investment "will stagnate due to weaker business sentiment and lower profit growth." This sentiment was starkly illustrated by the news that pharmaceutical giant Merck had scrapped plans for a £1 billion UK research centre.
In defence, a government spokesperson highlighted its investment plans, stating: "We are investing in our economic future, with over £120 billion more in capital investment compared with previous plans." They also pointed to the National Wealth Fund, claiming it had leveraged £5 billion in private investment and created nearly 12,000 jobs.
Despite this rebuttal, the combination of damning international data and vocal criticism from across the political and business spectrum presents a significant challenge for Chancellor Reeves as she prepares for the Spring Forecast.
