New business investment drops

21.08.08

The provisional figures, published by the Office of National Statistics (ONS), showed that business investment was down by nearly 2% during the second quarter – from more than £36,500m during the previous quarter to just over £35,800m.

The services sector was the hardest hit, with a loss of £626m, while the property, construction and transport sectors were also badly hit by the drop.

However, the ONS added that an increase in investment in production firms, as well as a £92m boost in the financial intermediation industries, ‘slightly offset’ the damning figures.

David Kern, economic adviser to the British Chambers of Commerce (BCC), said the drop confirmed the organisation’s own findings, released earlier this months.

“The fall in business investment in the second quarter was worse than anticipated. It confirms that businesses are being forced to retrench in the face of the economic slowdown,” he said.

“The worsening economic pressures emphasise the need for the MPC and the Government to take the correct measures to counter the threat of recession.”

© Crimson Business Ltd. 2008