Buildings and structures is the only headline business investment component still below its pre-coronavirus levels. Transport investment can be particularly volatile because of the high value of some transport equipment. Transport equipment, and other buildings and structures, contributed negatively to business investment in Quarter 1 2023. These comments suggest that businesses both brought forward planned investment, and invested in capital they would not have otherwise, to take advantage of the super deduction. More businesses stated that they had increased investment in the latest quarter to take advantage of the super deduction ahead of its closure. There was a significant increase in respondent comments to our Quarterly Acquisition and Disposal of Capital Assets Survey (QCAS) referring to the “super deduction” this quarter. Despite some differences in qualifying items, the effect of the super deduction incentive is most likely to be reflected in ICT equipment, other machinery and equipment, and transport.
From 1 April 2023 this will be replaced by a 100% full expensing capital allowance. This coincides with the end of the temporary tax relief on qualifying capital asset investment, known as “super-deduction”.
The primary driver of growth in Quarwas ICT equipment and other machinery and equipment. Business investment is at its highest level since the pre-coronavirus (COVID-19) pandemic period (Quarter 4 (Oct to Dec) 2019), but remains 1.4% below that level. Positive contributions from information and communication technology (ICT) equipment and other machinery and equipment, and intellectual property products (IPP) contributed to this growth in business investment. Business investment rose by 0.7% in Quarter 1 (Jan to Mar) 2023, following a 0.2% fall in the previous quarter.
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