Inputs – Capital

The UK currently invests a smaller percentage of its GDP than any of its main competitors except the USA yet investment is said to be ‘the lifeblood of economic growth’

The more you invest, the more national productivity should rise, unit costs fall, competitiveness rise, sales rise and wealth, jobs and tax-take increase

But the amount of investment a nation needs depends on where it’s starting from:

• If capital assets are worn out or in old smoke-stack industries, more will be needed than if they were relatively new, as in China

• The UK has most of the infrastructure it needs in place already – it just needs to be maintained – high speed rail links, more London airport capacity and two more motorways may be all the new investment needed

And there are quite different categories of investment hidden within the above figures so it’s not clear where any nation should invest more, or less, for most impact

The UK’s problem also lies in finding sources of this investment:

• The private sector’s profits will be squeezed if growth is not forthcoming soon

• The banks are re-building their balance sheets and investing in risk-free assets

• Business angels and venture capitalists have become even more cautious

• The UK government has to make drastic public expenditure cuts over the next few years – its pockets are not bottomless pits despite ‘quantitative easing’

• Foreigners’ inward investments, which once imported cash, latest  technology and best practices, are drying up as ‘sovereign debt’ threats loom large