Pearson Edexcel tutor2u%' Economics (A) Advanced Level Advance Information Short I 2.2.3 Investment Extract 1: UK growth According to the CBI (a business lobby group). the UK economy [3 at risk of becoming trapped In a cycle of low growth and high taxation unless the government introduces measures to boost Investment and skills, reduce regulations. by the Independent Ofce for of between 1.3 to 1.7% as pandemic restrictions started to ease. to 2.5% It is not good encugh'. he said. and exploit the opportunities of the green economy. Tony Danker from the CBI points to forecasts Budget Responsibility (OBR) showing that the UK economy grew at an annual rate 'For a country that is used to growing at 2.0 Extract 2: UK Rab Research and development (R&D) refers to creative work undertaken to increase the stock of knowledge. In 2019. total expenditure in the UK on R&D was 238.5 billion (1.74% of GDP); this is the equivalent of 577 per head. R&D investment has risen steale over the past few decades, from 220.4 billion in 1986 to 838.5 billion in 2021 (in 2019 prices). But, as a proportion of GDP, R&D expenditure has fallen over this period. it was the equivalent of 1.84% of GDP in 1985. The UK government has set a target for total R&D investment to rem 2.4% of GDP by 2027. Extract 3: UK investment Business investment accounts for around 10% of GDP in the UK. It also tends to be one of the most cyclical components of GDP, and consequently accounts for a greater share of the volatility of GDP. Two of the main ess investment over recent years are likely to have been the UK's decision to leave the EU factors affecting busin and the Govid pandemic. Both events have increased uncertainty This uncertainty has lowered current demand for goods and services, as well as expected medium to longer-tenn future demand, which is likely to lead to lower Investment. With reference to the Information provided and your own knowledge, examine two factors that might explain the low rate of business investment in the UK. (8 marks) 1