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Increased public infrastructure investment vital to keep driving the UK economy.

Treasury culture of stopping investment in infrastructure projects must change says ex-BBC economics editor Stephanie Flanders

Stephanie Flanders

Government must focus on the “old fashioned stuff” and invest in skills and infrastructure to help continue to drive forward the economy, former BBC economics editor Stephanie Flanders told a gathering of senior built environment and infrastructure leaders this week.

There is a well established economic link between investment in infrastructure and growth in GDP, she said, pointing out although there was private investment money ready to invest, government had to take the lead to create the demand. 

“It is crazy that we invest so little in our infrastructure when interest rates are so low,” said Flanders who is now chief market strategist for UK and Europe at JP Morgan. 

“But there has been a long term decline in public investment in infrastructure and it worries me. Now that I have left the BBC I can say this,” she added. “There’s a huge appetite for long term investment [in the investment community].”

"We spend so little time talking about the things that really matter to investor confidence – skills and infrastructure – whether or not we have decent airports,” Stephanie Flanders

Flanders was speaking at the Fast Forward Thinking event organised by contractor Skanska to to encourage the industry to think about how the cities of the future will be financed, designed and lived in.

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She pointed out that the UK remained way down the international rankings in terms of proportion of GDP invested in infrastructure and said that changing the attitudes of civil servants and Treasury officials towards investment was critical to ensure that infrastructure was thought of as positive to the economy. 

“The things that investors talk about [as drivers for market confidence] are not the same as the things that [the media or politicians] talk about,” she said highlighting that there was in reality little fundamental difference between party economic and fiscal policies. 

“Yet we spend so little time talking about the things that really matter to investor confidence – skills and infrastructure – whether or not we have decent airports,” she said. “These are the things that are important to investors but we just don’t talk about them.”

Flanders also highlighted that one of the biggest issues for the UK economy was the north-south divide and the how we try to rebalance the economy without damaging London power as the “capital of the world”.

“It is not so much a London problem but a centralisation problem,” she said pointing out that fall-out from the recent Scottish independence referencum could in fact help to start a vital process of greater devolution of power to the regions. 

“We create the built environment in which we all work and play,. It is all about leadership – we must push the boundaries across our value not just put a tick in the box.” Mike Putnam

“London would certainly be more efficient if it had its own tax raising powers’” Flanders said. “But we have been bad at building cities with sufficient critical mass to attract people,” she added, highlighting the need to give regional cities the ability and incentive to cluster not compete.

The Skanska Future Day was designed to bring together some of the biggest names from across engineering and design, including designer Thomas Heatherwick and futurists Thimon De Jong and Gerd Leonhard to discuss how to meet the social, economic and sustainability challenges caused by urbanisation and the changing landscape of our cities.

Introducing the conference Skanska UK chief executive and president Mike Putnam, highlighted the responsibility that businesses had across the communities in which they worked. 

“We create the built environment in which we all work and play,” he said. “It is all about leadership – we must push the boundaries across our value not just put a tick in the box.”

If you would like to contact Antony Oliver about this, or any other story, please email antony.oliver@infrastructure-intelligence.com.