Firm investments in skills and capital in the UK services sector

Josh De Lyon and Swati Dhingra

No 1632, OECD Economics Department Working Papers from OECD Publishing

Abstract: Investments in both human and physical capital are key drivers of economic growth and productivity gains. The United Kingdom has had a turbulent recent history, being strongly affected by the Global Financial Crisis of 2008 and more recently voting to leave the European Union, its largest trading partner. We use firm-level survey data for the UK services sector to show that firms were less likely to increase expenditure on worker training in the periods following each event. In the period following the EU Referendum, firms were 9% less likely to increase expenditure on worker training relative to the period before the referendum. The effects were most severe for larger firms and for those located in London and the South East. The impacts also varied across industries, with firms in real estate, professional, scientific and technical activities among those most negatively affected, while administrative activities and accommodation services were least negatively affected. We see similar changes in expenditure on all forms of physical capital available in the data: IT; vehicles, plants and machinery; and land and buildings. Following the EU Referendum, firms were also more likely to reduce training expenditure, although the magnitudes of the changes were smaller than those following the Financial Crisis of 2008.

Keywords: EU exit; Financial Crisis; Human capital; physical capital; training (search for similar items in EconPapers)
JEL-codes: E22 F66 M53 (search for similar items in EconPapers)
Date: 2020-11-23
New Economics Papers: this item is included in nep-bec, nep-eur and nep-mac
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Persistent link: https://EconPapers.repec.org/RePEc:oec:ecoaaa:1632-en

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