Resolution Foundation

Cutting the cuts

How the public sector can play its part in ending the UK’s low-investment rut
The State

A history of weak and highly volatile public investment has contributed to Britain becoming a low investment nation, leaving us poorer and affecting people’s everyday lives. This is the result of repeated policy failings that require radical reforms so that public investment can be used to boost growth and meeting the challenges of the decade ahead. This briefing note – part of the Economy 2030 Inquiry, funded by the Nuffield Foundation – set out the reasons for such policy failure, the implications of getting it wrong, and how we should reform the way we do policy in this area.

Public investment has not just been too low, it has also been too volatile with frequent, large changes in investment spending plans. This leads to underspends as investment takes time to ramp up and financing managers are reticent to commit long-term funds. A key reason for this volatility is strong political and fiscal incentives to cut public investment when the public finances are under pressure. While the Government to its credit planned to increase investment after the 2019 General Election, raising it to levels not sustained since the 1970s, it has been cut just two years later in the wake of Liz Truss’ mini-budget, reversing more than 80 per cent of the gains that had been planned.  


For all research queries about this report, please contact James Smith. For press queries, please contact the Resolution Foundation press office.

James Smith
Research Director,
Resolution Foundation
Email James