Infrastructure concerns outweigh funding fears
A LACK of investment in roads, power plants, railways and airports could seriously jepordise economic recovery and long-term growth, according to a new study.
The findings of KPMG’s Global Infrastructure Challenge survey show that more than 70% of business leaders think that more investment is needed to support their company’s future growth.
Only 14% believed that existing infrastructure was adequate (24% in Western Europe).
Nearly all respondents said that infrastructure “quality and quantity” was critical to location decision and expansion.
Iain Moffatt, office senior partner at KPMG’s Leeds office, said that the report echoed concerns already voiced in Yorkshire.
“Improving infrastructure will not only create jobs but act as an economic stimulus if managed correctly,” he said.
“The regions with better infrastructure will attract new businesses and be at a competitive advantage, so I’m convinced it’s a concern that warrants the private and public sectors working together in this region to find ways of jointly funding infrastructural development.”
He added: “After all, it is going to take very hard work to emerge from the recession, so let’s put ourselves in the most advantageous long term position for when the upturn comes.”
The survey also found that improved transport facilities are particularly high on the wish list with better roads cited as the most urgent infrastructure need globally although Western Europe cited railways as a top priority (48%).
Bigger and better airports are also being sought.
Two thirds of the business leaders questioned said that poor transport infrastructure had increased their company’s operating costs and more than one in five said it hurt competitiveness, ability to grow and attractiveness to employees.
Across both developed and emerging nations, power generation, schools and hospitals are all areas in which there is demand for investment, though a focus on water infrastructure was specific to India and China.
Surprisingly, the lack of available credit comes second to infrastructure concerns. Worldwide, 58% of business leaders said they expected the economy where they operate to improve over the next five years rising to 75% among executives in the emerging ‘BRIC’ countries (Brazil, Russia, India China).
Government effectiveness and the availability of relevant skills are considered more significant threats to long-term infrastructure investments plans.
Four in five executives say governments should work to a greater extent with the private sector to develop effective financing solutions for infrastructure improvements.
Iain Hasdell, KPMG’s Leeds based UK head of local and regional government, added: “This survey chimes with debates in Yorkshire on the region’s infrastructure deficits.
“For instance excellent transport connectivity, access to sustainable cheap power and the continuous hosting of major business events are all key ingredients for regional growth, yet these are examples where Yorkshire has profound infrastructure deficits.”
He continued: “We have a railway infrastructure for freight and passengers that inadequately connects Yorkshire’s conurbations with the sea ports of Immingham, Grimsby and Hull while the links between Yorkshire and the rest of the UK provided by the region’s airports and roads are arguably poor.
“I am heartened that a convention centre of genuinely international scale and major carbon neutral power generation are both potentially on the cards in Yorkshire – though much work is yet to be done in these areas – as until our infrastructure deficits are addressed, the region’s economic future remains at risk.”
