By Agency reporter

Tuesday, 23 Nov 2010

LONDON: The United Kingdom will have to spend at least ¤350bn on renewing and expanding its transport infrastructure over the next two decades if the economy‘s growth potential is to be realised, management consultancy firm, McKinsey and Company, said in a report published on Monday.

In the report, McKinsey outlines priority areas in which action is needed to maximise growth, including making the UK more attractive to multinational companies and freeing dynamic cities to pursue their own growth strategies.

Others include boosting productivity in all sectors of the economy and focusing on education and health as industries with huge international potential, rather than as problematic state services, The Wall Street Journal reported on Monday.

”Contrary to the prevailing economic gloom, we judge the prospects for long-term economic growth to be strong–provided that bold action is taken to remove key barriers,” said Kevin Sneader, UK managing partner at McKinsey. ”We believe that it is critical to move on from today‘s necessary focus on the UK‘s short-term fiscal position.”

The firm said investing in the UK‘s transport and energy infrastructure should be a key priority, but one that is difficult to accomplish given the government‘s large debts and its focus on cutting spending.

McKinsey said the needed spending on transport would represent a 45 per cent increase on the average spent between 2000 and 2009. During much of that period, the UK economy was growing rapidly, and the government‘s finances appeared to be in better shape than they are now, to the extent that it financed 80 per cent of spending on transport infrastructure.

With its ability to spend now severely constrained, McKinsey said without changes to the management of transport projects and charges imposed on the users of the transport network, total investment would be ¤100bn less than the minimum required.

 

Source: Punch