Business Investment In The UK - April To June 2023

2nd October 2023

UK Business investment increased by 4.1% in Quarter 2 (Apr to June) 2023, revised up from the provisional estimate of 3.4% growth.

Business investment has grown by 9.2% compared with the same quarter a year ago.

The main contributor to business investment growth was transport, mainly because of investment in aircraft.

Whole-economy investment (technically known as Gross Fixed Capital Formation (GFCF)), which includes business and public sector investment, increased by 0.8% in Quarter 2 2023, revised up from the provisional estimate of 0.0% growth.

GFCF has grown by 4.6% compared with the same quarter a year ago.

Business investment
UK Business investment increased by 4.1% in Quarter 2 (Apr to June) 2023, revised up from the provisional estimate of 3.4% growth, with upwards revisions from transport, intellectual property products (IPP), and information and communication technology (ICT) and other machinery and equipment. These revisions are the result of later survey data. Business investment has grown by 9.2% compared with the same quarter a year ago.

Transport was the main contributor to the increase in business investment in Quarter 2 2023. Transport investment can be particularly volatile because of the high value of some transport equipment. Transport growth was particularly strong in air travel data because of the acquisition of new aircraft. The UK saw an increase in imports of aircraft from the United States in April 2023, as shown by our UK trade: April 2023 bulletin. The latest UK Civil Aviation Authority (CAA) data show an increase in passenger travel numbers compared with last year, however, passenger numbers are still below their pre-coronavirus (COVID-19) pandemic level.

Business investment, after lagging behind whole-economy investment (technically known as Gross Fixed Capital Formation (GFCF)) for much of the coronavirus pandemic and post-pandemic period, is now closing the gap as shown in Figure 1. This is driven by a combination of negative contributions to GFCF, mainly weaker dwellings investment from Quarter 4 (Oct to Dec) to Quarter 2 2023, and GFCF IPP and transport data lagging behind the equivalent business investment series over the latest two quarters.

Whole-economy investment
Whole-economy investment (technically known as Gross Fixed Capital Formation (GFCF)), which includes business and public sector investment, increased by 0.8% in Quarter 2 2023, revised up from the provisional estimate of 0.0% growth. The largest contribution to growth in the latest quarter came from transport with a smaller positive contribution from intellectual property products. The upwards revision to growth compared with the previous release came from the impact of downward revisions to levels of ICT equipment and other machinery and equipment investment in Quarter 1 (Jan to Mar) 2023. This revision was the result of revised survey returns as well as revised government data.

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