Business investment up in fourth quarter
by Elaine Frei
The Office of National Statistics has released new data showing that business investment in the UK was up in the last quarter of 2006, suggesting that corporations are more confident about the economy. Investment in business was up 3.3 percent in the quarter and was 11.1 percent higher than it was in the fourth quarter of 2005. The increases were especially concentrated in the energy, utility, and services sectors.
The bad news was that investment dropped 4.5 percent in the quarter for firms engaged in manufacturing. This seems to indicate that these companies are having a difficult time with the current economic conditions. Some analysts believe that business investment will continue to grow, but that it might be limited in some areas by hikes in interest rates. In addition, it is predicted that margins could be narrowed in some sectors by higher input prices and an increase in competition.
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