August 5, 2021

UK becoming increasingly attractive for infrastructure investment

The UK is now the ninth most attractive market in the world when it comes to attracting infrastructure investment, rising four places since 2012 and ranking amongst the highest risers in the Global Infrastructure Investment Index published today by Arcadis. 

The report, which ranks 41 countries by their potential to attract investment, finds that Singapore is the most favourable location, followed by Qatar and the UAE. Taking into account factors such as infrastructure demand, ease of doing business, risk and capacity to deliver, the index places the UK in ninth position, ahead of all other European nations except Norway and Sweden.

The stable and relatively low-risk nature of the UK’s business environment, coupled with the government’s renewed commitment to major infrastructure – through the likes of HS2, Crossrail 2 and the newly-announced HS3 – are all set to open up opportunities to potential investors. However, when it comes to delivery, some question marks still exist. Despite the welcome move to establish a National Infrastructure Commission, tasked at speeding up delivery and removing infrastructure from party politics, the prolonged and politicised decision-making processes involved remain something of a barrier. 

A further cloud on the horizon is June’s referendum on the country’s membership of the European Union. Uncertainty created in the run-up to the vote has seen the deal flow slow as banks and contractors wait for the result. European firms, in particular, who are major investors in the UK are expected by some to respond negatively to an exit. 

That said, regardless of the political issues afoot, the UK remains very much a leading market for those eyeing infrastructure investment. Government efforts to promote growth in the north of England through the ‘northern powerhouse’ have opened up numerous new opportunities, while devolution of transport powers means many other new projects are planned outside of the capital. What remains to be seen is whether regional delivery mechanisms, with little experience of taking on these types of project, have what it takes to win over investor confidence. 

Chris Pike, UK Infrastructure Director at Arcadis, said:

“The government has made some bold commitments to improve the country’s infrastructure in recent years. New roads and high quality rail links hold big potential for the UK’s national and regional economies. This demand, coupled with the relatively stable nature of our economy, make the UK a very attractive option for those looking to invest.

“While it is positive that the UK has become more attractive to infrastructure investors over the last two years, we cannot afford to stand still. The government needs to provide long-term clarity over infrastructure policy and look at the over-prescriptive nature of regulation in several key sectors. The National Infrastructure Commission is now up and running and is already beginning to show signs of real benefits. However, wading through the political quagmire is still going to be a challenge in the short term. On a local level, too, question marks still exist as to whether the local authorities will have the ability to take the ambitious plans through to fruition effectively.

“Unless politicians address these concerns, we could potentially see the pool of international investors who are looking to invest in UK infrastructure reduce. This investment will certainly be needed if  we are to provide the kind of infrastructure our country needs to continue to prosper.”

  

Top ten markets for infrastructure investment

 

2012

2014

2016

Singapore

1

1

1

Qatar

2

2

2

UAE

4

3

3

Canada

3

4

4

Malaysia

7

7

5

Norway

6

6

6

Sweden

5

5

7

USA

11

8

8

UK

13

10

9

Netherlands

9

11

10