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Brexit fears mask underlying pressures on investment
Publication year - 2019
Publication title -
economic outlook
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.1
H-Index - 8
eISSN - 1468-0319
pISSN - 0140-489X
DOI - 10.1111/1468-0319.12433
Subject(s) - brexit , investment (military) , obsolescence , economics , return on investment , pace , capital (architecture) , macroeconomics , technological change , monetary economics , market economy , labour economics , international economics , production (economics) , business , european union , history , geodesy , archaeology , marketing , politics , political science , law , geography
▀ Brexit uncertainty is seen as a likely culprit behind weakness in UK business investment. But structural shifts in the economy alongside issues relating to how investment is measured suggest that even without the uncertainty factor, a significant revival in measured investment spending may not materialise. ▀ Movements in relative prices continue to favour expansion by relatively labour‐intensive rather than capital‐intensive sectors. Relatedly, a shift towards investment‐light services activity is persisting, while recent changes in the make‐up of employment are reducing the extent of likely automation. ▀ Moreover, the ongoing pace of technological change and corresponding fears of rapid obsolescence could deter investment. And an increasingly fuzzy division between investment and consumer spending suggests that official data may be increasingly understating investment's true level.