Summary

Public investment is a policy issue of central importance for public service delivery, economic growth, the UK’s climate ambitions, and much else besides. Indeed, many economists view low rates of public investment as a key contributing factor to the UK’s lacklustre productivity performance. Both the Labour and Conservative parties are presently committed to spending plans that would see public investment decline as a share of national income over the next parliament. Both are also committed to a fiscal rule that requires debt to be stabilised by the end of the forecast period; in present circumstances, that constrains the ability of the government to borrow to invest. The question then becomes one of how much to prioritise investment for tomorrow versus consumption today. This will be a key political trade-off for the next government.