Business investment in the UK is set to drop for the first time in six years in the wake of Rachel Reeves’ Budget, as high interest rates and weak corporate sentiment weigh on companies’ capital spending.
Expenditure by businesses on assets will contract by 0.4 per cent next year, according to forecasts from the Office for Budget Responsibility, the first decline since Covid-19 curbs meant the economy was in effect shut down.
Despite growing by more than 2 per cent annually since 2021, investment would be “sluggish” until 2030 on the back of lower profits, poor sentiment and borrowing costs pushing up the cost of capital, the fiscal watchdog said.
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