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The Office for National Statistics (ONS) has recently published NUTS-2 area estimates of Gross Fixed Capital Formation (GFCF) for the first time. GFCF may be described broadly as the acquisition less disposals of new or existing fixed or physical assets (as opposed to financial investments). These assets include infrastructure such as roads and railways, buildings such as dwellings, factories and offices, plant and machinery, vehicles and equipment such as computers. Such investment is very important. Not only does it contribute to current wealth creation but also lays the basis for future output. The NUTS-2 estimates are a measure of GFCF by producing units resident in the NUTS-2 areas.
Out of the 37 NUTS-2 sub-regional areas across the UK, Inner London had the highest estimate of GFCF in 2000, at just over £16bn while the Highlands & Islands and Cornwall & Isles of Scilly both had the lowest at just over £1bn each. These sums represented 10.3% and 0.7% respectively of the UK total.
GFCF in Lancashire in 2000 amounted to £2.3bn, equivalent to 1.5% of the UK sum (Table 1). By total investment expenditure, this level ranked Lancashire as 26th in size out of the 37 UK sub-regions and it is evident that investment in Lancashire was much lower than its share of population might have implied.
Over the three-year period 1988-2000 for which data is available GFCF in the UK increased in nominal terms by £8.1bn or +5.4%. Over the same period, investment in Lancashire apparently fell by more than £1.6bn or by 41%, a far greater reduction than experienced by any other UK sub-region. The period is too short for any solid conclusions to be drawn from this as due to the "lumpy" or erratic nature of much capital expenditure, particularly at the relatively small sub-regional level, GFCF can vary considerably year-on-year. However, it would appear that the year 1998 was somewhat atypical for investment in Lancashire with the "Business Services" sector enjoying what appears to have been a major one-off investment project. The much lower investment levels recorded in this sector subsequently are more typical of the longer-term trend in Lancashire which for some considerable time has exhibited below par investment relative to the UK across most of its business categories.
Estimates of GFCF by industry are shown in Figure 1. It is not possible to allocate GFCF for dwellings or for transfers and valuables to a particular industry and estimates of these are shown separately. Against a backcloth of rather lower investment locally than nationally, a disproportionate share of investment locally is in manufacturing and in dwellings. These two areas account for 38% of all Lancashire GFCF compared with a 28% share in the UK. Conversely, whilst GFCF in transport & communications and business services takes up 29% of the national total, the same two sectors in Lancashire absorb just 13% of the local sum.
Gross fixed Capital Formation by Sector
This page was compiled by Peter Kivell .
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