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UK risks becoming globally uncompetitive
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Pipeline of infrastructure projects should be more robust
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National Infrastructure Commission is a major opportunity to address decades of underinvestment
In its report, ‘Infrastructure investment – mind the gap?’, the IFoA analyses some of the issues that underlie the investment gap in three sectors: renewable energy, transport and housing. The IFoA is calling on Government to consider the following key priorities to encourage new sustainable investment in the UK’s infrastructure:
• Develop a sustainable pipeline of infrastructure projects that fit into a coherent, long term strategy.
• Ensure policy recognises that institutional investors differ from the public sector in how risks and returns are perceived.
• Address that different types of investment call for different approaches to issues such as financing, regulation and risk management.
• Funding models should recognise that investors with greater risk appetites will tend to get involved in projects at an earlier stage than more cautious investors.
• The National Infrastructure Commission represents a major opportunity to reverse decades of underinvestment.
• The Government and the Prudential Regulation Authority should take full advantage of EU regulatory changes such as Solvency II to promote more infrastructure investment by insurance companies.
Brandon Horwitz, Chair of the IFoA’s Finance and Investment Board, comments, “There is a global backlog of infrastructure projects that are critical in driving growth. According to the World Bank $3.7tn of global infrastructure investment is needed annually, however actual investment levels are only $2.7tn. There is a similar investment gap here in the UK, and with the UK’s existing infrastructure becoming older, we risk not being to support our growing, and ageing, population in coming years.
“The IFoA report states that addressing the infrastructure gap is critical to drive the UK’s growth and competitiveness. Innovative
models of public-private financing should be developed to attract new investors into the sector.
“The creation of the National Infrastructure Commission last year creates a major opportunity for the UK to reverse decades of underinvestment, and will help to reduce uncertainty for investors. The Commission will need to attack deep-set issues driving investor behavior and build confidence in what is a new sector to many.”
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