There is no point in asking whether investment in the UK is "unusually low" ("Rust belt romantics", 20 February). The question is whether it is as high as we need, and the answer is a resounding "No."
It is clearly not high enough to employ the two million who are out of work and cut their pounds 25bn annual cost to the exchequer, nor to recover our long-standing trade surplus in manufacturing.
Diane Coyle says that "private sector business investment is about the same, relative to the size of the economy, as in the other big advanced economies". But that condemns us to an economy which is not big enough to give us the exports needed to balance our trade, nor to pay for the long-neglected demands of the public sector, health, education and housing.
Diane Coyle's eminent businessmen cannot increase industrial investment by waving a wand. The cost of financing investment in the UK is 40 per cent higher than that of our nearest continental rivals because we will insist on keeping a yo-yo currency which adds to the risk of investment for export and which also has a long-standing tendency to inflation. The political rhetoric which wraps the Union Jack round our depreciated currency leaves hard-headed businessmen cold.
The substitute for the rust-belt industries is a rate of investment in new products high enough to overtake our competitors again and regain the share of trade which we lost in the Eighties. We will not do that so long as the high risk of investment in sterling enables our main continental competitors to put down 40 per cent more investment - 40 per cent more new products - for the same interest cost.
Sir FRED CATHERWOOD
(The author was Conservative Member of the European Parliament for Cambridge and North Bedfordshire from 1984-94)Reuse content