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THE INVESTOR
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ANALYSIS
ECONOMY
O
ne of the key pledges
made byTheresa May
when she became
Prime Minister was
that she would boost
infrastructure spending. So far, there has
been no detail: she has hinted that she
remains committed to the Northern
Powerhouse concept, but has raised
doubts over the government’s
commitment to projects such as the
proposed new runway at Heathrow.
The Brexit referendum added further
uncertainty on issues ranging from
whether immigration controls would
affect construction firms’ ability to hire
foreign workers to the UK’s participation
in the Investment Plan for Europe, which
aims to unlock at least €315 billion
(£274 billion) in private and public
investment over three years
1
.
The initial impact of the vote was
detrimental to the industry, with statistics
for July showing that infrastructure
construction spending fell by a fifth
2
,
although it is expected to bounce back as
the initial shock recedes.
There is plenty of scope for increased
investment.TheWorld Economic
Forum’s latest Global Competitiveness
Report ranks the UK 24th for the quality
of its overall transport infrastructure
3
,
while the £34.4 billion the UK spent in
the financial year 2015/16 equates to
just 1.9% of GDP, according to the
Institution of Civil Engineers
4
.
The Confederation of British Industry’s
regular surveys underline the importance
of infrastructure to businesses – and
their concern over the pace and scale
of investment
5
. The government’s own
infrastructure plan includes projects
worth £118 billion on energy, £38.3
billion on rail and £6 billion on digital
upgrades
6
. The question is: how will May
prioritise and fund these commitments?
1
consilium.europa.eu, November 2014
2
barbour-abi.com, August 2016
3
reports.weforum.org,September 2015
4
ice.org.uk, July 2016
5
cbi.org.uk, October 2015
6
gov.uk,March 2016
Sources: all statistics sourced from ce.org.uk, July 2016
£1
of
infrastructure
construction
raises economic
activity by
£2.84
Every
1,000
direct jobs
created by the
delivery of new
infrastructure
boosts wider
employment
by more than
3,000
jobs
Construction
accounts for
2.1
m
jobs,
6.2
%
of the total
in 2015