Global plans for infrastructure spending
James Giblin from investment company LGT Vestra offers comments on infrastructure spending and plans from around the world.
If Boris Johnson’s ambitious plan for a logistically challenging 28-mile bridge between Scotland and Northern Ireland is anything to go by, the UK government had a significant appetite for large infrastructure projects. The desire to bounce back quickly from the pandemic, along with pledges to reduce carbon emissions, have further ignited government plans for infrastructure spending.
This is not just a UK phenomenon; the US, Europe and many Asian administrations have all announced large scale infrastructure projects not seen for generations, many linked to the green transition.
The view in the US
The US senate passed a $1tn infrastructure bill earlier this year that was supported by 19 Republicans in the Senate, a rare show of bipartisan support in what has been an incredibly divided period of politics in Washington.
The expenditure is undeniably large and includes $550bn of new spending as well as renewing existing spending. The bill is largely focused on traditional infrastructure, including $65bn to expand high-speed internet access, $110bn for roads and bridges and $25bn for airports. Green infrastructure does also feature with $15bn allocated to electric vehicles.
The bill is a far cry from the initial proposal from the Biden administration. This was almost four times the size at $2.6tn and included much broader spending, with over half the proposed spending on R&D, housing and community care.
The rest of the world
Elsewhere, funds from the Next Generation EU fund finally look set to begin flowing as Brussels has signed off spending proposals by Spain and Portugal. The deal was originally brokered between 27 EU nations in 2020 and prioritises spending on energy transition and digitisation projects as the region continues its recovery from the pandemic.
China also looks set to continue its Belt and Road initiative, which aims to create a new “Silk Road” between Asia and
Europe, as well as investing trillions in infrastructure projects across the developing world.
The initiative dwarves all others in terms of scale and reach, and has extended Chinese influence far beyond its borders. These projects are likely to have a greater focus on green energy moving forwards following President Xi’s announcement that China will aim to have CO2 emissions peak before 2030 and carbon neutrality by 2060.
Global growth following COVID
All of the aforementioned infrastructure projects are clearly going to be positive for global growth as we continue to bounce back from the global pandemic.
However, supply chain disruption has not yet faded and many commodity prices remain at or near all-time highs. Going forward, politicians are going to have to find a delicate balance, a choice between building back a greener and stronger economy while refraining from pushing too far, overheating the economy and having to slam on the brakes.
Read more on this topic in the first issue of the Carpenter Box‘s newsletter South East Property.Read South East Property Issue 1
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