It’s been an “interesting” six months for the infrastructure industry in the UK. I can’t remember a time when there has been so much policy focus from government on infrastructure.
We have had:
- Announcements about the (sort of) cancellation of BSF and some blue light projects.
- Some more positive news about the confirmation of Crossrail.
- The publication of the National Infrastructure Plan, which sets out for the first time the government’s vision for infrastructure investment for the next five years.
- The publication of a revised approach to the use of competitive dialogue in infrastructure projects.
Meanwhile, we still await Infrastructure UK’s final report on the (allegedly) higher costs of major civil engineering in the UK when compared to other EU and non-EU countries and the Sebastian James led review of all capital investment in schools. These last two reports were due to be published by now but are taking longer than expected – no jokes please…
While this seems like a lot of noise, there still aren’t actually many deals coming to the market, in the UK at least. The work that is coming out largely relates to major projects such as Crossrail (the tunnelling packages were awarded last week) and the emphasis in the National Infrastructure Plan on economic infrastructure to promote economic growth indicates fewer, but larger, projects and a move away from spending on social infrastructure such as hospitals.
So how do infrastructure experts see the market? Is the overseas market looking more attractive than the UK? We recently canvassed the opinions of over 130 leading global infrastructure experts on the state of the global infrastructure market. Our research focussed particularly on the views of the C-suite and senior decision makers drawn from construction, power, corporate finance, investment, utilities and government agencies and we have published the results in our report, Driving growth: building blocks for global infrastructure.
Here are the key findings:
- 85% of our experts believe investment inflows into infrastructure will increase – this suggests that various governments’ stated commitments to infrastructure spending to stimulate economic growth is being taken seriously.
- 65% believe global infrastructure prospects are either good or very good – this seems a rather low figure. Perhaps it is linked to our experts’ concern around the availability of funding for infrastructure – 47% of respondents felt that lack of (private) finance was a serious or very serious threat. The collapse of the bond market has no doubt contributed to this concern, and the bank market remains tight.
- The UK is the most attractive place for infrastructure investments, with 52% of our experts regarding it as attractive or very attractive. However only 17% of respondents believe prospects in the UK have improved since 2008.
- The US is hot on the UK’s heels, with 49% of our experts regarding it as attractive or very attractive. This indicates that P3 (as our American friends call PPP) finally seems to be gaining some momentum.
- China and India follow next (46% and 45% respectively) with Western Europe (45%) coming out slightly ahead of Brazil (41%). Perhaps surprisingly, given the amount of press attention it gets, the Middle East only scored 35%.
So in conclusion, the emerging markets are expected to be a good source of work going forward but it’s going to requires some effort – only 21% of our respondents said they were active in Indian projects and just 16% in Chinese projects. In the meantime, given the attention that infrastructure is getting through the National Infrastructure Plan and Infrastructure UK, perhaps we shouldn’t turn our backs on the UK just yet?