Brexit fears mask underlying pressures on investment. (23rd July 2019)

• Record Type: Journal Article
• Is Part Of: Economic outlook. Volume 43:Number 3(2019)
• Page Start: 13
• Page End: 16
• Publication Date: 2019-07-23
• Subjects: Economic forecasting -- Great Britain -- Periodicals; Great Britain -- Economic conditions -- 1945-1964 -- Periodicals; 330.94100112
• DOI: 10.1111/1468-0319.12433
• Languages: English
• ISSNs: 0140-489X

Abstract

Abstract : ▀Brexit uncertainty is seen as a likely culprit behind weakness in UK business investment. But structural shifts in the economy alongside issues relating to how investment is measured suggest that even without the uncertainty factor, a significant revival in measured investment spending may not materialise. ▀Movements in relative prices continue to favour expansion by relatively labour‐intensive rather than capital‐intensive sectors. Relatedly, a shift towards investment‐light services activity is persisting, while recent changes in the make‐up of employment are reducing the extent of likely automation. ▀Moreover, the ongoing pace of technological change and corresponding fears of rapid obsolescence could deter investment. And an increasingly fuzzy division between investment and consumer spending suggests that official data may be increasingly understating investment's true level.