This policy brief’s analysis of the drivers of British, US and French growth shows that lagging private investment is the main cause of the UK’s growing productivity gap. And contrary to the popular view in Westminster circles – that the biggest constraint on Britain’s growth is that its planning system makes it very hard to build – this paper finds that macroeconomic forces have been crucial. The investment bust after the financial crisis was bigger in Britain than in France, and the UK’s recovery was weaker than in the US. That was true of investment in property, in other physical assets like machinery and computers, and in ‘intangibles’ such as R&D and branding. The vote to leave the EU then snuffed out the investment recovery in all three asset classes.
Author: John Springford, Associate fellow, Centre For European Reform.
This article is available on the CER website.
