Britain’s economy is stuck in a growth “doom loop,” according to the U.K.’s Institute for Public Policy Research, due to decades of underinvestment by the government and corporations.

According to recent data from a left-leaning think tank, the U.K. has made $500 billion ($638 billion) less in business investments than other wealthy nations of equal size.

Only Poland, Luxembourg, and Greece invest less than the U.K.’s half-trillion-pound expenditure shortfall, which places it 27th out of 30 OECD countries and behind all other G-7 members.

According to the IPPR, the United Kingdom has underinvested in infrastructure, R&D, skills development, and training since 2005, spanning several decades and several governments.

Since then, private sector investment in real teams has needed to increase by $354 billion, while public sector investment has needed to increase by $206 billion, in order to maintain the G7 average.

“The U.K. is in an investment and growth doom loop. Chronic under-investment, public and private, is delivering stagnating growth and a struggling economy,” Luke Murphy, associate director for energy and climate at IPPR, said.

The U.K. was ranked worse than other major nations in a separate report by the IMD on Tuesday, particularly in terms of economic performance and business efficiency.

A request for comment on the findings from CNBC was not promptly answered by a U.K. government spokeswoman.

The right-leaning Conservative Party, which has been in power for 13 years, has asserted that higher business investment will help the economy grow. This includes additional expenditure on technology and renewable energy sources as well as a package of tax reliefs proposed in the spring budget.

The International Monetary Fund’s most recent prediction is that the U.K. would have the worst performance among the G7 nations this year, with an overall GDP decline of 0.3%.

It occurs as rising living and borrowing costs continue to restrain consumer spending and as Brexit uncertainty dampens corporate morale.

The IPPR compared this behaviour to the Biden administration’s Inflation Reduction Act when it stated that increased public investment might boost business confidence and encourage the private sector to “crowd in” with more expenditure.

“If the economy is the engine of a country, investment is its fuel. But the UK’s tank is running on empty and it’s harming economic growth, driving inequality, and slowing progress towards net zero and energy security,” George Dibb, associate director for economy at IPPR, said.

In response to still-rising interest rates, the opposition Labour Party, which is presently leading the Tories by almost 16 points in the polls, announced last week that it would scale back its major spending commitment for green sectors.

(Adapted from TheGuardian.com)

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