UK business investment is far more healthy than is widely recognised because official figures no longer reflect modern business practice, according to claims by the Institute of Directors (IOD).

The IOD has criticised the official government figures, which it claims do not give an accurate picture of business investment in the 21st century.

Graeme Leach, chief economist at the IOD, says business investment is now high as a proportion of GDP, and that the current level of 10% is very healthy.

He also says the traditional measures of business investment are outdated because many don't consider intangible factors such as innovation, HR or research and development.

The under-capitalisation of investment in IT software also suggests that overall business investment is greater than shown in the official statistics.

“Our business investment performance is good, not bad. It would be nice if we could hear a little less moaning and a little more gloating,” he said.

“Of course, there is always room for improvement, but if one considers the recent past, business investment (as a proportion of GDP) has been above historic levels.”

The Office for National Statistics admits that some measurements are outdated and has promised to change the way it compiles the figures. The body is set to include software in the investment statistics by 2007, following a period of consultation.