Business investment in the UK: April to June 2022 revised results

• Business investment grew by 3.7% in Quarter 2 (Apr to June) 2022, revised down from the provisional estimate of 3.8%.

• The level of business investment is now 8.0% below where it was before the coronavirus (COVID-19) pandemic in Quarter 4 (Oct to Dec) 2019.

• Between 2020 and 2021, business investment fell by 0.1%.

• Gross fixed capital formation (GFCF) fell by 1.4% in Quarter 2 2022, revised down from the provisional estimate of 0.6%; when compared with the pre-pandemic Quarter 4 2019, GFCF remains 1.7% lower.

• Business investment has grown by 5.2% compared with the same quarter a year ago, while gross fixed capital formation (GFCF) has risen by 3.9%, reflecting a fall in government investment.

• This release contains data that are consistent with the UK National Accounts, The Blue Book 2022, which will be released on 31 October 2022; data for all periods in this release are subject to revision in line with the National Accounts Revision Policy.

Business investment grew by a revised 3.7% in Quarter 2 (Apr to June) 2022, revised down from the provisional estimate of 3.8%, with Other buildings and structures the main driver. Business investment has grown by 5.2% compared with the same quarter a year ago. Our economy-wide investment measure of gross fixed capital formation (GFCF) fell by 1.4% in Quarter 2 2022, revised down from the provisional estimate of 0.6%. A fall in government investment, particularly in Other buildings and structures was the cause in the fall of GFCF. The level of business investment in Quarter 2 2022, remains 8.0% lower than the pre-coronavirus (COVID-19) pandemic level in Quarter 4 (Oct to Dec) 2019; GFCF is only 1.7% lower.

In the Blue Book 2022, we have introduced some improvements to our gross fixed capital formation (GFCF) estimates. The largest change comes from an improvement to the method for calculating GFCF on self-built homes, which will make an impact on all years back to 1997.

Own-account construction of dwellings is calculated using a sum of costs approach of the components labour, materials, and mixed income. Data are sourced from the Homebuilder and Renovating Self-build Market Report used in conjunction with the house price index (HPI), HMRC, average weekly earnings (AWE) and Business Energy and Industrial Strategy (BEIS) data to replace previously forecast sources for this series. Further changes include the incorporation of revised Annual Business Survey benchmarks for 2019 and new data for 2020.

Revisions for 2021 Quarter 1 (Jan to Mar) to 2022 Quarter 2 (Apr to June) have also been affected by incorporation of later survey and other source data. Seasonal factors have also changed because of periods being opened for revision, leading to a revised seasonally adjusted time series.

Annual business investment growth is unrevised on average between 1997 and 2021 in chain volume measure (CVM). The maximum positive revision to growth during this period was 1.4% (2019) and the minimum was negative 0.8% (2007).

Annual GFCF growth is unrevised on average between 1997 and 2021 in CVM. The maximum revision to growth during this period was 1.2% (2010) and the minimum was negative 0.9% (2021).

Further information on the national accounts methodological improvements introduced in Blue Book 2022, together with the resulting revisions for 1997 through to 2021, can be found in the Blue Book 2022 publication.

Using data collated by the Organisation for Economic Co-operation and Development (OECD) from relevant national statistical institutes, we can compare gross fixed capital formation (GFCF) within the G7 nations. Figure 4 shows GFCF data for the G7 nations back to Quarter 1 (Jan to Mar) 2021.

The UK performed poorly in comparison to the rest of the G7 nations in the first quarter of 2021 before bouncing back strongly in the following quarter. The final two quarters of 2021 saw the UK have the second and third highest growths, respectively. In Quarter 1 2022 the UK had the second largest growth, marginally behind Italy, before having the second lowest growth in Quarter 2 2022, only having higher growth than Canada. Italy showed strong growth throughout 2021 and into 2022 with the largest growths of all the G7 nations in all but one quarter. The growth of France and the United States (US) has tracked the average growth of the G7 nations for most of the periods from the beginning of 2021. Canada's growth has been one of the most volatile along with the UK, experiencing periods of high growth in 2021 Quarter 4 (Oct to Dec) before showing the weakest growth of the G7 nations in Quarter 2 (April to June) 2022.

Gross fixed capital formation – by sector and asset
Dataset | Released 30 September 2022
Sector and asset breakdowns of gross fixed capital formation (GFCF), including business investment and revisions, in current prices and chained volume measures, non-seasonally adjusted and seasonally adjusted, UK.

Quarterly Stocks Survey (QSS) and Capital Assets Survey (QCAS) Textual Data Analysis
Dataset | Released 30 September 2022
The indicators and analysis in this dataset are based on qualitative responses from comments left by responding businesses to both our Quarterly Acquisitions and Disposals of Capital Assets Survey (QCAS) and Quarterly Stocks Survey (QSS).

As more time is needed to produce a Blue Book 2022 consistent GFCF dataset we are unable to produce some of the more detailed, mainly industry, data that normally accompany this release.

This includes:

• business investment by asset

• business investment by industry and asset

Also breakdowns of:

• the transportation and storage industries

• household and non-profit institutions serving households (NPISH)

• new dwellings and improvements to dwellings

• ICT equipment 

• intellectual property products

We will instead be releasing these alongside our provisional estimate of business investment to be published 11 November 2022.

A detailed list of the time series affected are available upon request.

GDP and sector and financial accounts estimates are unaffected by this decision. Estimates of consumption of fixed capital and productivity will however have been affected. Further information will be included alongside those outputs.

The issue affecting the Own-account software series and resultingly the Intellectual property products series we notified users about earlier in the year has now been resolved. This will remove the level drop into 2021 and then the level increase into 2022. Quality and methodology information on strengths, limitations, appropriate uses, and how the data were created is available in our Business investment QMI.

Revisions

In line with the National Accounts Revisions Policy, all periods from 1997 Quarter 1 (Jan to Mar) to 2022 Quarter 2 (April to June) are open in this publication. The survey revisions open for this publication are from 2021 Quarter 1 to 2022 Quarter 2. Below is a table of our response rates for the Quarterly Acquisitions and Disposals of Capital Assets survey (QCAS):

In Quarter 2 (Apr to June) 2022, the Quarterly Acquisitions and Disposals of Capital Assets Survey (QCAS), one of the largest data sources for gross fixed capital formation (GFCF) and business investment, had a response rate of 78.2% for estimates used in this revised release compared with 63.2% at the provisional stage.

Data within this bulletin

All data within this bulletin, unless specified, are presented in chained volume measure (CVM). This means it has the effect of price changes removed (in other words, the data are deflated).