MPs have warned that the UK will struggle to deliver sustained growth unless ministers overhaul the institutions that connect domestic savings, pension capital, public procurement, and scale-up finance.
The House of Commons Business and Trade Committee said Britain’s persistent investment gap is holding back productivity, limiting the growth of smaller companies, and allowing promising scale-ups to be acquired before they reach maturity.
In its first report of the 2026-27 session, Investing in the UK economy, the committee set out a series of recommendations aimed at improving access to finance across the real economy. The government has two months to respond.
The report describes a structural mismatch between the capital available in the UK and the companies that need it. Britain has around £3 trillion in long-term pension savings, a globally significant financial centre, Europe’s largest venture capital market, and universities that have produced 1,300 spinout companies in 12 years. At the same time, the committee said 380,000 UK businesses that want finance cannot access it.
The Alternative Investment Market has lost more than 1,000 companies since 2007, while 94% of UK scale-ups are acquired before maturity, half of them by overseas buyers. MPs also pointed to £610bn sitting in British cash savings accounts, often earning below-inflation returns, while companies with growth potential struggle to secure the finance needed to expand.
The report said: “The Government will not deliver the highest rates of growth in the G7 unless it makes bold reforms to the nation’s institutions for mobilising investment.”
UK whole-economy investment averaged 17.3% of GDP between 1997 and 2025, the lowest rate in the G7. Although investment improved to 19.7% of GDP in the fourth quarter of 2025, Britain remained the second lowest among G7 countries. Matching Japan’s investment rate would require more than £180bn to £200bn in additional investment each year.
The committee links underinvestment directly to weak productivity. UK GDP per hour worked has grown by only 0.6% since 2010, compared with 1% a year in France, Germany, and the United States. Evidence submitted to MPs argued that low capital investment leaves workers with fewer tools, weaker technology adoption, and less productive infrastructure.
Small companies, start-ups, and scale-ups sit at the centre of the report. Britain remains strong at creating early-stage companies, particularly through universities and research institutions, but struggles to help them through the scale-up phase. The challenge is especially acute in deep technology and life sciences, where development cycles are long and capital requirements are high.
The committee called for a stronger regional presence from the British Business Bank, including physical branch offices in the nine Mayoral Strategic Authorities by June 2027. It also urged the bank to work with Post Office Ltd on expanding access to banking services through shared banking hubs.
Public procurement is another major focus. The UK government spends around £385bn a year on goods, works, and services, yet MPs said that spending is not being used consistently as a growth lever for domestic companies. The committee repeated an earlier recommendation for a 30% target for direct spend with SMEs by 2028, arguing that this could put an additional £22.7bn into smaller businesses each year.
The findings land as ministers continue to place growth at the centre of economic policy. The report suggests that tax incentives, public finance institutions, and venture capital will not be enough unless they are connected into a system that gives companies better access to customers, regional advice, long-term capital, and procurement opportunities.
Britain’s capital markets have struggled to convert research strength and start-up formation into large domestic employers and globally scaled listed companies. The committee treats that as the result of accumulated weaknesses across pensions, banking, procurement, regulation, public finance, and market structure rather than a single policy failure.
Pension consolidation, the Mansion House Accord, the National Wealth Fund, and the British Business Bank are already part of the policy architecture. MPs are arguing that those tools must now become more coherent, more regional, and more willing to support companies before they are large enough to attract traditional institutional capital.
The report also raises a sharper question about how growth is measured. A country can produce promising companies, world-class research, and large pools of savings while still losing economic value if scale-ups are sold too early or forced to seek deeper markets overseas.
Britain is not short of capital in aggregate. The weakness identified by the committee is the machinery that moves money into productive companies at the point where growth is most fragile.
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