UK’s political short-termism is killing hopes of business investment | Richard Partington

Determined to make a bad situation worse, Rishi Sunak’s decision last week to move the goalposts on the government’s net zero commitments angered business leaders desperate for greater stability.

Elsewhere, Brexit remains a serious headwind for companies, while offshore wind projects are stalled after the government’s botched subsidy auction received no new bids from energy firms.

Considered key to raising the long-term growth rate of the economy, business investment involves companies spending on plant, machinery, and information and communication technology.

The position contrasts sharply with the US, where Joe Biden is backing companies by ploughing billions of dollars into infrastructure and green technologies through the Inflation Reduction Act, offsetting some of the pressure on business investment after rate rises from the US Federal Reserve.

The EU and China are taking similar steps, spending billions of dollars of public money in a subsidy war to pull ahead in the green industries of the future.

With high interest rates for a long time to come, looming recession and Sunak pulling the rug from major government commitments, the business investment required to kickstart the British economy is in serious jeopardy.