The UK needs to transform itself into a high investment economy to shift out of its low growth “doom loop”, one of the architects of New Labour will claim.

Lord Mandelson, one of the key figures in transforming the Labour Party under Tony Blair and who went on to serve in the cabinet, will hit out at “persistent underinvestment”.

His comments come after a report by the Institute for Public Policy Research (IPPR) found that the UK has been bottom of the league in the G7 group of major economies when it comes to investment for 24 out of last 30 years.

Countries like Slovenia, Latvia and Hungary all attract higher levels of private sector investment than the UK as a per cent of GDP, the think tank revealed.

Lord Mandelson, who served as business secretary in Gordon Brown’s government, will use a speech in Edinburgh on Thursday to claim that this low level of investment is linked to falling productivity in the UK.

Speaking ahead of the Chancellor Rachel Reeves’ first budget later this month, the Labour peer will speak at an event organised by the Reform Scotland think tank.

There he is expected to argue that the UK needs to “appreciate — and measure — the value of investment, rather than merely the cost of it”.

And, claiming that “Brexit means that we are, for now, driving with an economic handbrake on”, he will argue that the impact of leaving the European Union means administrations across the UK need to get every area of economic policy right, including industrial policy, infrastructure, planning, skills, science and innovation, regulation, and migration by skilled workers.

However, he will say that getting the UK Government’s economic growth strategy right will mean the UK becomes “the most dynamic economy in Europe”.

This will mean that while the UK is “damaged by Brexit” it would not be “defined by it” and would be “still the most attractive European market for private and venture capital”.

The UK Government has been contacted for comment.