The latest data from the UK Office for National Statistics reveals a positive trajectory for business investment in the second quarter of 2023. The revised results indicate a growth of 4.1%, surpassing the initial estimate of 3.4%. Year-on-year, business investment has expanded by an impressive 9.2%.
Key Highlights:
- Transport Sector Drives Growth: The primary driver behind the surge in business investment is the transport sector, notably propelled by substantial investments in aircraft. The acquisition of new aircraft, particularly from the United States, played a significant role. The UK Civil Aviation Authority reports an uptick in passenger numbers compared to the previous year.
- Whole-Economy Investment Rises: The broader measure of investment, known as Gross Fixed Capital Formation (GFCF), which encompasses both business and public sector investments, increased by 0.8% in Q2 2023. This is a revision from the preliminary estimate of 0.0% growth. Year-on-year, GFCF has seen a 4.6% increase.
- Positive Revisions and Sector Contributions: Upward revisions in Q2 2023 were influenced by positive adjustments in transport, intellectual property products (IPP), and information and communication technology (ICT), as well as other machinery and equipment. The transport sector’s growth is particularly noteworthy, compensating for weaker dwellings investment in the previous quarters.
- Closing the Gap: Business investment, after lagging behind whole-economy investment during and post the COVID-19 pandemic, is now catching up. Negative contributions to GFCF, mainly due to weaker dwellings investment, and lagging data in GFCF IPP and transport sectors, have contributed to this convergence.
Outlook:
The robust growth in business investment signals a positive outlook for the UK economy. As businesses continue to invest in key sectors, especially in transport infrastructure, the overall economic landscape appears resilient.