Political dithering, high levels of regulation and a convoluted planning and approval process are some of the factors that may deter fund managers from investing in the UK's infrastructure projects – which include constructing a new high-speed railway network and nuclear facilities – according to a research report by consultancy firm EC Harris. According to the firm’s Infrastructure Investment Index, the UK is at risk of missing out on significant investments into its national infrastructure as mixed messages from the ruling coalition government about the future direction of its policies is creating uncertainty among fund managers.
“The main attraction with infrastructure is the long-term, predictable… return it can offer investors,” said Matthew Cutts, head of lenders and investors at EC Harris. “However, to secure the upfront capital there must be a commitment to sustaining long-term policy levers that will make these schemes bankable. Sadly this type of consensus is… lacking in the UK, with the public squabbling over the recent energy bill and the ongoing paralysis about expanding Heathrow… threatening to undermine the UK’s future competitiveness.”
The Infrastructure Investment Index ranked the attractiveness of infrastructure opportunities in 40 countries by evaluating a number of factors, including the ease of doing business in each market, tax rates, GDP per capita, government policy, the quality of the existing infrastructure and the availability of debt finance.
The UK was ranked 13th, behind the US in 12th position. Singapore was ranked in first place followed by Qatar and Canada in second and third, respectively.
“Much has been made of the need to attract private finance to help address the UK’s infrastructure deficit, however there is still a significant gap between the political intent and the economic reality,” said Mr Cutts. “Unless concerted steps are taken to provide greater policy certainty, loosen regulation, and speed up the approval process, investors will continue to look at other markets with fewer [entry] barriers… where they can see a much clearer exit strategy.”