ABSTRACT
Introduction The sluggishness of capital investment is one of the more puzzling features of the UK economic recovery from the 1990s recession. Investment is normally much more volatile than the economy as a whole, increasing strongly in recoveries and falling sharply in recessions. Yet between 1992 and 1996, total fixed capital formation increased by just 4.4 per cent-an average rate of increase of 1.1 per cent. In the same period, GDP growth averaged over 2.5 per cent. Investment actually fell in 1995 and rose by just over 1 per cent in 1996 according to the current official estimates.
