The UK has missed out on nearly £2tn of investment in business and infrastructure over the past quarter of a century because of inconsistent government policy, according to a study by the consultancy Oxford Economics commissioned by Getlink, the owner of the Channel Tunnel, and the companies behind Gatwick, Stansted and Manchester airports.

The report, The UK’s Investment Shortfall, published on 8 September, concluded that private investors in Britain pay an “unpredictability premium” because of inconsistent public policy and the elevated cost of doing business.

Of 38 advanced economies in the OECD, only Greece has been weaker than the UK for business investment in relative terms, the study found. In 2025 the UK invested 18.9 per cent of GDP, against an average of 22.5 per cent across the OECD, it said.

Oxford Economics calculated that if the UK had invested at the OECD average, an extra £1.9tn would have flowed into the British economy since the turn of the millennium. The shortfall amounted to £109bn in the past year alone, the report said.

It stated: “Three barriers have been identified that set the UK apart from higher-investing economies: the burden and design of business taxation; the costs of delivering new capacity, particularly planning, energy and construction labour; and policy unpredictability.”

“When businesses do find a way to invest, they pay an ‘unpredictability premium’, incurring the cost of adapting to new policies brought in by different governments,” the report added.

The findings prompted an open letter to the chancellor, John Healey, sent on 8 September before the budget on 28 October. The signatories, whose rates bills have up to trebled, include the chief executives of Getlink, London Gatwick, Manchester Airports Group, Eurostar, London St Pancras Highspeed and the Global Infrastructure Investor Association.

The companies say annual bills for infrastructure operations are doubling or tripling under the new valuation regime introduced by the Valuation Office Agency, whose 2026 revaluation took effect on 1 April.

Getlink froze its planned UK rail investment in November after the agency proposed almost tripling Eurotunnel’s rates bill from £22m to £65m by 2028, while Gatwick has warned that a potential 300 per cent rise in its own bill could jeopardise its second runway.

Yann Leriche, chief executive of Getlink, said: “The latest valuation cycle has seen Eurotunnel’s rateable value nearly triple, despite no change in the scale or nature of the infrastructure, nor its revenues. Such major and unpredictable increases in business rates are detrimental to investment and growth.”

“We deliver or fund the infrastructure that keeps Britain moving and connects it with the world,” the companies wrote to the chancellor. “But, as asset-heavy, capital-intensive industries, we cannot support that mission if our ability to invest is impacted by disproportionate and unpredictable commercial property taxes.”

The letter said the country’s approach to business rates was “not fit for purpose, directly undermining a desire for investment-led growth”.

It continued: “The government message to business has been clear: if a company invests in the very infrastructure which the UK needs to drive productivity and growth, it will face disproportionately higher taxes. As a result, the story has been the same for a quarter of a century, lagging significantly behind our supposed peers on investment, and our productivity, growth and living standards suffering as a result.”

The letter added: “A fair, reformed business rates system for infrastructure would signal an end to outsized taxation on investment and put the country on a path to growth.”

Innes McFee, chief executive of Oxford Economics, said: “The UK has been stuck in a low-growth rut since the late-2000s financial crisis, and it has become the country’s defining economic problem.”

The report found that households would have £1,540 more real disposable income a year by 2040 if the UK recovered its business investment shortfall against the other G7 countries.

Public sector investment is set to run at about 2.6 per cent of GDP over this parliament, its highest level in more than 40 years, the study said, but it concluded that public spending alone could not close the gap: “A public pipeline, however ambitious, will deliver less than intended if the environment facing private capital remains discouraging.”

Read the full article →