Investment at two-year low
BUSINESS investment has fallen to its lowest for almost two years in a major embarrassment for Chancellor Gordon Brown, who has made boosting capital expenditure one of his top priorities.
Official figures revealed investment in the final quarter of last year was 3.2% lower than the previous quarter and down 7.6% on a year ago. Totalling £29bn between October and December, it was the lowest since the first quarter of 2000.
The bulk of the deterioration was seen in the service sector, where investment plummeted by 5.1%. Investment in the manufacturing sector edged up by 1.6% but was still down 10.8% on a year earlier. Economists said the increase was a reaction to the third quarter's 11.3% drop rather than any inherent improvement.
A Treasury spokesman blamed 11 September for the downturn. 'It is quite natural for businesses, during a period when there was so much uncertainty, to have deferred their investment plans. We would expect plans to come back on stream in the coming months,' he said.
Ian McCafferty, the CBI's chief economist, said: 'CBI survey evidence suggests that the decline we have been seeing in manufacturing investment is likely to continue for some time yet.'
