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Since 1995, Britain has been starved of private investment
Growing businesses, properly capitalised, hire
Idle cash today means fewer first jobs tomorrow
Youth unemployment is one of those issues that politicians across the spectrum agree is a scandal. The debate tends to focus on training programmes, welfare incentives, employer subsidies. These things matter. But a report published today by the Jobs Foundation points to something more fundamental: the businesses that would employ young people are not growing fast enough, because the capital to fund that growth is sitting in savings accounts doing nothing.
The connection between investment and jobs is not complicated. When a business raises capital, it buys equipment, takes on software, expands its operations. It hires people. The UK has sat in the bottom quartile of advanced economies for private capital investment in every year since 1995, leaving a gap of roughly £100 billion annually compared to our peers. The most direct consequence of that shortfall is jobs that were never created.
Britain’s investment gap
The report models what closing that gap would mean in practice. Mobilising £100bn of additional capital into productive investment each year would add approximately £30bn to GDP, around 1% of total output. Sustained over time and compounded, the modelling suggests it could add around half a percentage point annually to GDP per capita growth. On the OBR’s current trajectory, GDP per capita doubles every 64 years. At the improved rate, that falls to 44 years. The difference, stretched across a working lifetime, is the difference between a generation doing modestly better than their parents and a generation doing substantially better.
For the businesses we work with at the Jobs Foundation, the numbers translate directly into decisions about hiring. The companies most likely to create the next wave of jobs in Britain are growing firms that need equity capital to get to the next stage. Equity allows a business to take on people and invest in their development without the immediate pressure of debt repayment. The UK has historically been better at creating such firms than at funding them, and the capital to change that is already in the country, sitting largely idle in the savings accounts of thirteen and a half million ordinary households.
Connecting savers with growing businesses
The British public holds approximately £2.3 trillion in cash outside their homes and pensions. Much of it is losing value to inflation year after year. A survey conducted for the report found 78% of adults with meaningful savings are holding cash for reasons that government policy could directly address, and 83% said they would invest more if those barriers were removed. The barriers are real: a tax environment that penalises patient investment, financial products whose fees and structures are opaque, and a regulatory culture that has spent decades telling ordinary savers that investing is complicated and risky without ever making clear that holding too much cash carries its own risks.
The jobs case for fixing this is direct. Growing businesses, properly capitalised, hire. They hire junior staff and train them. They create the kind of entry-level roles that give young people without connections or credentials a foothold in the economy. Youth unemployment has persisted through periods of both high and low headline employment because the firms most likely to offer those opportunities have consistently been underfunded. Directing more retail capital toward high-growth British businesses would not solve that overnight, but it would address the problem at its root in a way that no training programme or employer subsidy scheme has managed.
How to unlock capital
There is a wider point about what kind of economy we are trying to build. The Jobs Foundation exists because we believe business is a force for good, and that the most meaningful thing a business can do for its community is give someone a job, develop their skills, and create conditions in which they can build a life. Delivering on that requires businesses to be able to grow. Growth requires capital. And capital, in the quantities needed, will not flow from government alone, from foreign direct investment alone, or from pension funds alone. It has to come, in part, from the savings of ordinary people who are willing to back British businesses because they understand that doing so is in their interest as well as the country’s.
The reforms set out in our report require no new public spending and no compulsion. We ask for better financial education so that investment feels genuinely accessible to people who have never been shown how it works. We ask for regulatory changes that give ordinary savers the same access to productive investment that wealthy individuals and institutions have always enjoyed. We ask for a tax environment that rewards patient capital, and for the government to recognise, explicitly, that regulatory change has a cost, and that the cumulative weight of new rules discourages precisely the kind of long-term business investment that creates jobs.
Britain has the savings. It has the businesses. What it has lacked is a framework that connects them. Building that framework is what the report is about, and the jobs that would follow are what it is for.
‘Jobs and Investment’, published by the Jobs Foundation is available here.
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