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Fastest Expansion in UK Business Investment in Two Years

Recent numbers show that business investment in the UK grew by 5% in the first three months of this year. This is almost double the prior estimate of 2.7%.

Although business investment is among  the factors used to assess the amount of “spare capacity” in an economy,  the Office of National Statistics kept its estimate for economic growth in the quarter unchanged at 0.8%

In the beginning of this year, the Bank of England estimated there was between 1% and 1.5% of spare capacity in the economy.

This spare capacity usually arises from underinvestment by businesses. It is the Bank of England’s way of gauging how far the nation’s GDP is below its potential growth. According to the Office of National Statistics,  investment contributed 0.4% of the 0.8% of growth in the economy in the first quarter.