UK business investment suffers steep fall

26th February 2015

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Official figures show that business investment in Britain dropped sharply in the final three months of last year.

Data from the Office of National Statistics (ONS) showed that business spending fell by 1.4% quarter-on-quarter over the period, marking the second consecutive quarterly decline.

The ONS suggested the steep fall in the price of oil, which has more than halved since June was partially to blame. It said that given the recent steep fall in oil prices, it might be expected that investment by the oil extraction industry might also fall, as oil production becomes less profitable.

Howard Archer, chief UK and European economist at IHS Global Insight described the drop in investment as “a major disappointment”.

He said: “This was reported to be substantially influenced by falling investment in the oil and gas extraction sector which is clearly a consequence of the plunge in oil prices. It may also be that investment is being limited by increased business caution ahead of May’s general election as well as significant global economic uncertainty – especially the Eurozone’s problems.”

The ONS also confirmed that the economy grew 0.5% in the final quarter of 2014.

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