New ONS figures show UK has lowest levels of investment in G7 – but businesses say they stand ready to help Government reverse trend
- Transport and infrastructure investment firms say business rates reform at Budget would stimulate productivity-boosting investment
- Falling government investment shows private sector will be relied upon to get Britain building – but rates stand in way
- Closing gap could boost household incomes by £1,500 a year
New investment data issued by the Office for National Statistics (ONS) shows Britain remains rooted to the bottom of the G7 league table, sparking calls from a group of businesses for urgent action at the Budget.
The businesses, from the worlds of transport and infrastructure investment, say they stand ready to support the Prime Minister’s drive to deliver growth in every postcode but that reforming business rates is an “absolute imperative” to help them do that.
They were reacting to latest Office for National Statistics (ONS) data, which shows total investment in the UK during Q2 represented less than 19% of GDP – nine percentage points lower than Japan, the best performing G7 country.
It is the fourth consecutive quarter the UK has ranked bottom of the G7, which also includes the United States, Canada, Germany, France and Italy. It comes after a report from Oxford Economics showed the UK had missed out on nearly £2 trillion of investment by not keeping pace with the OECD average for 25 years.
Britain’s weak performance reflects a 2.9% decrease in government investment in Q2, offsetting small increases in private sector investment in the quarter.
With public finances strained, that lays bare the need to create the conditions for large-scale private sector investment in productivity-boosting infrastructure, according to London Gatwick, Manchester Airports Group, Getlink, London St. Pancras Highspeed, Eurostar and the Global Infrastructure Investor Association.
They say changes to the business rates system for infrastructure firms have seen bills increase by up to 400%, leaving them with effective tax rates of up to 77% in the worst cases. That has caused them to pause, cancel or rethink projects that would create jobs and drive growth across the country.
In a joint statement, they said: "Over the past 25 years, only Greece has a worse record on investment than the UK among major economies.
"Throughout that time, ever-increasing taxes on asset-heavy, capital-intensive businesses have served as a major barrier to them investing in the exact type of infrastructure we need to solve our economic stagnation. A lack of policy stability also makes the UK less attractive for global investors.
"This latest data show investment may be progressing, but not yet at the rate required to boost economic activity, close the gap with comparable economies and deliver growth in every postcode.
“Given the current fiscal position it is clear that the private sector will be essential in delivering the investment the UK needs and we stand ready to support this Prime Minister in delivering his vision. We are confident we have a shared view of the role investment in strategic infrastructure has to play in turbo-charging productivity and growth.
"That makes creating a fair and predictable business rates system - one that incentivises, rather than penalises, investment - an absolute imperative and something that must be addressed in the Budget."
Between the organisations, soaring rates have already had an impact. MAG – owner of Manchester, London Stansted and East Midlands Airports – has paused £130m of investment from its five-year plan after its bill more than doubled at the last Budget.
Getlink, owner of the Channel Tunnel, has seen its rateable value triple from £40m to £118m and had to cancel plans to invest in the reopening of an international rail freight terminal in Barking.
The ONS data release shows “whole economy” investment – known as Gross Fixed Capital Formation (GFCF) grew just 0.9% in Q2, having been revised down from a previous estimate of 1.2%.
While that is up 3.1% on 2025, the gap between the UK and the rest of the G7 has widened. In Q2, Italy, Canada and France all had investment at 22% of total GDP, with the United States at 21%.
The latest data comes after separate reports set out how badly the UK has performed on both public and private investment over many years.
Oxford Economics' The UK's Investment Shortfall revealed the UK has missed out on nearly £2 trillion of investment by failing to keep up with OECD averages for 25 years.
This performance has been taken to explain why the UK lags G7 countries on productivity. The report found that households would have more than £1,500 more in real disposable income if the UK can catch up with average rates of investment as a share of GDP by 2040.
The research found that business taxes are one of the top three factors distinguishing the UK from higher-investing countries. On profits, the UK taxes broadly in line with other countries. But on taxes on productive assets, and business rates in particular, it has no parallel in the OECD.
Notes to editors:
UK investment compared to G7 countries can be found here: Business investment in the UK - Office for National Statistics
The UK’s Investment Shortfall from Oxford Economics can be found here: The UK's Investment Shortfall | Oxford Economics