The Competition and Markets Authority in the UK has launched a study to investigate barriers to investment in the country. They have observed that the mark-up charged for goods and services has increased over the past 25 years. The authority plans to release its initial findings towards the end of the year, focusing on how competition impacts the UK’s appeal as an investment destination.
Sir Keir Starmer recently highlighted the UK’s approach to competition as a potential obstacle for investors. The CMA’s study, which was already in progress before the prime minister’s comments, aims to address the rising mark-ups in the UK. According to their report, the difference between production costs and selling prices has increased by approximately 10% over the past 25 years, although this is lower than in the US and other comparable nations.
Furthermore, the CMA found that business dynamism has declined, with new entrants facing challenges in competing with established businesses. The agency also noted a decrease in job creation and destruction by businesses since 2004, indicating reduced competitiveness in the labor market.
Amidst growing scrutiny, the CMA has intensified its growth program following the government’s emphasis on prioritizing growth, investment, and innovation. The agency’s research is intended to support the government’s growth mission and industrial strategy.
CMA chief executive Sarah Cardell emphasized the role of effective competition in driving economic growth, investment, and innovation during a period of significant opportunities for the UK. The government is seeking input on areas of focus for the independent regulator in the future.
In November 2023, the previous Conservative government instructed the CMA to prioritize creating a pro-competition, pro-growth, pro-investment environment. This directive followed criticism of the CMA’s initial decision to block Microsoft’s acquisition of Activision Blizzard, which was later reversed. The incident led Activision to criticize the UK for being “clearly closed for business.”