Uswitch reveals the industries getting the most business investment
Using the latest available industry-granular data, Uswitch business insurance experts have taken a deeper look into the state of business investment in the UK.
- The latest available industry data[1] shows the biggest investment areas for all companies are buildings and intellectual property products
- These investments provide cash flow advantages for businesses who gain steady rental incomes
- The biggest increase (20%) from the previous year was in machinery and equipment
- As GDP increases corporate profit is elevated, enabling companies to spend more on new equipment
- The above is echoed in terms of sectors, with real estate activities seeing the most investment overall (£142bn)
- Accommodation and food services saw the biggest increase in investment (31%) as we moved out of the Covid-19 pandemic
Business investment (GFCF) by asset (data released October 2023)
| Type of asset | 2022 GFCF (£m) | 2021 GFCF (£m) | Change |
| Machinery and equipment | 95,713 | 79,512 | 20.38% |
| ->Transport | 26,360 | 17,207 | 53.19% |
| ->Other machinery and equipment | 53,855 | 48,612 | 10.79% |
| ->ICT | 15,499 | 13,691 | 13.21% |
| ->->Hardware | 10,297 | 9,042 | 13.88% |
| ->->Telecoms | 5,202 | 4,649 | 11.90% |
| Cultivated assets | 1,646 | 1,637 | 0.55% |
| Dwellings | 67,426 | 68,981 | -2.25% |
| Buildings and transfer costs | 148,414 | 131,272 | 13.06% |
| Intellectual property products | 101,941 | 97,111 | 4.97% |
| ->Software | 49,734 | 48,348 | 2.87% |
| ->Research and development | 43,357 | 39,917 | 8.62% |
| Total Assets | 459,733 | 403,847 | 13.84% |
The biggest 2022 investment areas for all companies were buildings (excluding dwellings) and intellectual property products, followed by machinery and equipment.
Further supporting its intention to give more stability and certainty on business tax, the Labour manifesto promised a Business Tax Roadmap which is intended to allow businesses to plan investments with more confidence. Labour previously stated that we could expect the Roadmap to be published in its first six months of government and it would provide clarity on any scheduled changes to corporation tax reliefs and capital allowances for five years, including setting out a timetable for planned reforms.
Investing in commercial property not only allows small businesses to have a regular rental income, it also offers the potential for capital appreciation over time.
The biggest increase from 2021 however, was in machinery and equipment – a 20% increase – with a 53% increase in investment in transport. Dwellings saw a slight decrease (2%) in investment.
With increased confidence, and GDP increases in 2024[2], it makes sense that businesses will continue to invest in machinery and equipment to further their growth.
Business investment (GFCF) by sector (data released October 2023)
| Sector | 2022 GFCF (£m) | 2021 GFCF (£m) | Change |
| Accommodation and food service activities | 4,748 | 3,618 | 31.23% |
| Information and communication | 32,354 | 25,906 | 24.89% |
| Wholesale and retail trade; repair of motor vehicles and motorcycles | 28,667 | 24,042 | 19.24% |
| Real estate activities | 142,322 | 120,217 | 18.39% |
| Water supply; sewerage, waste management and remediation activities | 8,117 | 6,944 | 16.89% |
| Administrative and support service activities | 36,477 | 31,286 | 16.59% |
| Electricity, gas, steam and air conditioning supply | 11,181 | 10,016 | 11.63% |
| Construction | 40,864 | 36,879 | 10.81% |
| Financial and insurance activities | 5,783 | 5,312 | 8.87% |
| Transportation and storage | 12,653 | 11,675 | 8.38% |
| Human health and social work activities | 10,582 | 9,990 | 5.93% |
| Mining and quarrying | 5,508 | 5,878 | -6.29% |
| Professional, scientific and technical activities | 19,326 | 21,003 | -7.98% |
| Arts, entertainment and recreation | 5,549 | 6,081 | -8.75% |
| Manufacturing | 11,522 | 13,749 | -16.20% |
| Other service activities | 1,436 | 1,936 | -25.83% |
| (Agriculture and education sectors omitted as no total investment figures were provided.) |
In terms of sectors, real estate activities saw the most business investment overall, of more than £142bn in 2022, followed by construction at £41bn.
Accommodation and food services saw a 31% increase in investment, the largest growth of all industries, after the lockdown in the UK due to the worldwide pandemic which ended in July 2021.
This was followed by information and communication, which saw a 24% increase.
Conversely, the biggest decreases were in other service activities (26%) and manufacturing (16%).
Tips for small business owners wanting to invest to encourage growth
Investing for growth is crucial for small business owners looking to expand their operations, increase revenue, and sustain long-term success. Andy Elder, Uswitch business insurance expert, gives his ten top tips on how small business owners can effectively invest for growth:
1. Reinvest Profits
- Allocate a portion of your profits back into the business. Reinvesting can fund new equipment, hire additional staff, or launch marketing campaigns, all of which can drive growth.
2. Focus on Digital Marketing
- Invest in digital marketing strategies like SEO, social media advertising, and content marketing. These channels offer cost-effective ways to reach new customers and expand your market presence.
3. Expand Your Product or Service Line
- Invest in research and development to expand your offerings. Introducing new products or services can attract new customers and increase revenue from existing clients.
4. Improve Operational Efficiency
- Invest in technology and automation tools that streamline operations. This can reduce costs, increase productivity, and free up resources for growth initiatives.
5. Enhance Customer Experience
- Invest in customer service training, loyalty programs, or customer relationship management (CRM) systems. A better customer experience can lead to higher retention rates and more referrals.
6. Invest in Employee Development
- Allocate funds for employee training and professional development. A skilled and motivated workforce can drive innovation and improve overall business performance.
7. Diversify Revenue Streams
- Look for ways to diversify your income by exploring new markets, offering subscription services, or partnering with complementary businesses. This can reduce risk and provide more stable growth.
8. Build a Strong Online Presence
- Invest in a professional website, e-commerce capabilities, and active social media profiles. A strong online presence is essential for attracting and engaging customers in today’s digital age.
9. Upgrade Infrastructure
- Invest in upgrading your physical or digital infrastructure, whether it’s renovating your shopfront, upgrading your IT systems, or enhancing your supply chain. Improved infrastructure can support increased demand and enhance your business’s ability to scale.
10. Explore Financing Options
- Consider external financing like small business loans, lines of credit, or crowdfunding to fuel growth initiatives. Ensure that any borrowed funds are used strategically to generate a return on investment.
