How Infrastructure Sector Is Evolving In UK?

Two of the London’s largest infrastructure projects have been firmed for further detainment on opening as construction is running behind the scheduled deadline.

North London’s Tottenham Football stadium had been scheduled to open in September, but it further got deferred until at least in March, which is increasing the cost of the project from 850m to about 1bn.

The club’s owners defended the delay with the fixing of critical cables and complex software.

In the meantime, London’s transport authority has confirmed that they will not be able to open Crossrail project until at least the middle of 2020, which can increase the cost of project to 17.6bn.

London’s east-west railway, which was scheduled to open last December, has not assured any new opening time.

Funding chaos and absence of Political vision seems to hold back infrastructure projects in UK

The quality of Britain’s infrastructure downgraded to a level at 24th in the world in 2016/ 2017 from 19th in 2006 by the World Economic Forum. With this ranking Britain was seen to be sitting at the bottom of the group of G7 nations.

Single biggest issue is lack of funds. Following the 2008 crisis, David Cameron’s coalition government emphasised on austerity programme that involved cutting down spending to reduce public borrowings.

After winning the 2015 election. Theresa May’s government planned for 500bn infrastructure projects, ranging from sewers to broadband. The proposed infrastructure projects rely heavily on attracting the wallet strings of the private sector investors.

While Private investors open string of their wallet enthusiastically to put equity into existing infra projects because there is no risk associated to the construction, but they are cautious on so-called greenfield projects.

“The biggest difficulty is to convince investors to take risk on major new projects” says Andy Rose, chief executive of the Global Infrastructure Investor Association.

Current government is not the first one who is trying to persuade the private sector investors to put large sums in infrastructure projects. Britain was the first one that developed the Private Finance Initiative, a model that is now popular across the globe. However, Private Finance became exploded partly because of lack of substantiation.

Another hurdle in getting private sector funding is the lack of long-term vision from central or local government

“Cities like Berlin, Amsterdam, Dublin and Copenhagen are attracting private investors because they have a clear vision and strategic plan”, says Lisette Van Doorn, CEO of Urban land Institute Europe, a research body.

There are no occult things to remedy Britain’s infrastructure ills, but there are specific things that the government could do to raise the fund from both the public and private sectors.

For example, Ministers can raise more funds from private investors by identifying proposed infrastructure projects that will provide long-term source of revenue.

To do so, the government needs to demonstrate to investors from where the future long-term stream will come from. Meanwhile, group of experts also emphasise that the government needs to engage more effectually to fix local opposition to projects that could provide wider benefits.

But bunch of experts argue that the government should capitalize the record low interest rates to fund greenfield projects over private financing.

Given the scenario, there is a mixed view on investing in infrastructure and the same line of thoughts runs for infrastructure related equities as well.

The content, including but not limited to any articles, news, quotes, information, data, text, reports, ratings, opinions, images, photos, graphics, graphs, charts, animations and video (Content) is a service of Kalkine Media Limited (Kalkine Media, we or us) and is available for personal and non-commercial use only. Kalkine Media is not authorised or regulated by the Financial Conduct Authority to provide regulated advice. The purpose of the Content is to educate and inform. The Content does not contain or imply any recommendation or opinion intended to influence your financial decisions and must not be relied upon by you as such. Some of the Content on this website may be sponsored/non-sponsored, as applicable, but is NOT a solicitation or recommendation to buy, sell or hold the stocks of the company(s) or engage in any investment activity under discussion. The Content is guidance about the different types of investments that are available and sets out general principles to continue before making investment decisions. Kalkine Media is neither authorised nor qualified to provide regulated investment advice through this platform. Users should make their own enquiries about any investments and Kalkine Media strongly suggests the users to seek advice from an appropriately authorised and/or qualified financial adviser, stockbroker or other professional (including taxation and legal advice), as necessary. Kalkine Media hereby disclaims any and all the liabilities to any user for any direct, indirect, implied, punitive, special, incidental or other consequential damages arising from any use of the Content on this website, which is provided without warranties. The views expressed in the Content by the guests, if any, are their own and do not necessarily represent the views or opinions of Kalkine Media. Some of the images/music that may be used on this website are copyright to their respective owner(s). Kalkine Media does not claim ownership of any of the pictures displayed/music used on this website unless stated otherwise. The images/music that may be used on this website are taken from various sources on the internet, including paid subscriptions or are believed to be in public domain. We have used reasonable efforts to accredit the source wherever it was indicated as or found to be necessary.