GIIA's market spotlights September 2024

U.S. news

By David Quam, Senior U.S. Advisor and Alessandro Pecorari, Policy & Public Affairs Manager

Last week, we reconvened our infrastructure industry coalition at our member Sullivan and Cromwell's offices in Washington, D.C., following a successful first meeting in May. Public and private sector stakeholders with strong interest in infrastructure modernisation - including key players like the National Governors Association (NGA) and United for Infrastructure - discussed what the potential outcomes from the US election could mean for IIJA and IRA under the next Administration. Topics included future influencing strategies, bill reauthorizations, and how to further enable private capital's role in supporting U.S. infrastructure modernisation. 

The following day we attended a gathering of the NGA's state infrastructure coordinators, who are a key conduit between the White House and state governors. We continue our work to ensure private capital becomes seen as a natural alternative to public funding. David Quam and Simon Montague presented to more than 35 state officials with GIIA’s unique Pulse survey data in which our members identify the U.S. as the world's most attractive investment destination. 

We also provided a sneak preview of our new global infrastructure attitudes survey, due out in October, in which our partner Ipsos has polled 23,000 people across 32 countries. This year’s survey shows that only 33% of U.S. citizens are satisfied with their country's infrastructure, compared to more than 40% in some other developed nations. Satisfaction with the state of airports was particularly low. The survey also reveals that 60% of Americans say they are fine with private investment if it leads to infrastructure improvements, compared with just 10% who are not. This data triggered a lively Q&A on public-private collaboration, raising state awareness of the appetite and potential for private investment in the U.S. and for more innovative approaches to funding infrastructure projects.

We then travelled to New York where more than 60 members attended a conversation between our CEO Jon Phillips and Sadek Wahba, Co-founder and Managing Partner at I Squared Capital, marking publication of his new book, Build: Investing in America's Infrastructure. Drawing on decades of academic research and deep industry experience, Sadek set out how sources of capital to pay for U.S. infrastructure have changed over the decades and offered recommendations to address current funding challenges, making a clear argument for a greater role for the private sector and public-private partnerships.

His talk was followed by an expert panel of industry leaders including Geoff Segal, managing director at Macquarie, Christopher Mann, partner at Sullivan and Cromwell, and DJ Gribbin, senior operating partner at Stonepeak. Together with our own David Quam, they discussed interpretations of the latest U.S election polls, the political challenges ahead for our industry, and the recent legal overturning of the ‘Chevron deference’, a judicial doctrine which has long insisted that the courts must defer to a regulatory agency's interpretation of ambiguous federal law or administrative doubt, if that interpretation is reasonable. The panel was followed by a networking reception, all generously hosted by Macquarie.

In federal news, the Build America Bureau (BAB) has announced that 45 communities have been awarded grants under the first round of the Innovative Finance and Asset Concession Grants Program. Funded by the Bipartisan Infrastructure Law, the program makes $100 million available over five years to help communities partner with the private sector to unlock the potential of local assets. The grants, typically around $1 million each, help public entities unlock value from existing assets and explore innovative financing and delivery opportunities. More than 70% of 45 awards across 25 states include transit-oriented and downtown redevelopment initiatives, including in North Miami, Fl, New Rochelle, NY and Baltimore, Maryland.

UK news

By Nick Elliott, Policy & Public Affairs Manager

Last week, GIIA’s Nick Elliott was in Liverpool representing GIIA at the Labour Party Conference. While the event was lively and well-attended, as media reports suggest, the atmosphere felt more cautious than celebratory. This was despite Labour’s decisive election win in July, marking their return to government after 14 years in opposition. I believe this reflective mood stems from the immense challenges the new government faces. Labour ministers offered only limited clarity on key policies, leaving many attendees awaiting more concrete details. Initiatives such as the industrial strategy, the National Wealth Fund, and Great British Energy remain central, but specific plans have been deferred until the autumn budget at the end of October.

Adding to the uncertainty, recent controversies have cast a shadow over the government’s early days. Questions surrounding Starmer’s acceptance of complimentary trips and clothing, along with criticism of his chief of staff’s authority and remuneration, have damaged the prime minister’s credibility. These issues have contributed to a significant drop in Starmer’s personal approval ratings and Labour’s polling numbers since July. Despite these headwinds, the conference drew record attendance, with around 20,000 people gathering in Liverpool. The government appeared to be balancing cautious optimism with the urgent task of restoring the nation.

During the ‘Business Day’ Q&A, the Prime Minister emphasised the importance of partnership and even emphasised the role of No.10 to connect investors with the appropriate government bodies to foster these partnerships. Indeed, Labour’s agenda relies heavily on leveraging private capital to help fund and deliver essential projects. Their plan makes Great British Energy (GBE) and the National Wealth Fund key to public-private collaboration, aiming to accelerate the UK’s transition to clean energy and stimulate economic growth. With billions in capitalisation, both entities are expected(!) to unlock significant opportunities for investment in renewable energy and infrastructure.

As Labour takes its first steps toward reshaping the UK’s economic future, it is clear that private sector collaboration will play a central role. However, the government must articulate a clearer vision for the country while managing recent controversies. Investors will be watching closely to see if the government can deliver on its promises and provide the stability needed for transformative infrastructure development.

EU news

By Harvey Chandler, Head of Policy & Public Affairs

This month, Commission President Ursula von der Leyen unveiled her proposed new European Commission, setting the stage for the European Union’s (EU) policy direction for the next half-decade. Observers expect the new, streamlined Commission, led by six Executive Vice Presidents and replacing the traditional Vice President format, to prioritise economic competitiveness, the green transition, and digital transformation, which aligns with the recommendations from Mario Draghi's ‘The Future of EU Competitiveness’. The report, widely seen as the blueprint for the next Commission, proposes an annual investment of roughly 5% of the EU's GDP, and a controversial joint borrowing mechanism to enhance the EU’s future competitiveness. For infrastructure investors, this indicates increased opportunities in sectors like clean energy, digital infrastructure, and transport networks, as the EU seeks to bolster its global economic standing and address the significant investment gap in these areas. The new Commission's focus on streamlining regulations and expanding public-private partnerships (PPP) aims to create a more favourable environment for private infrastructure investment, potentially unlocking new funding mechanisms and accelerating project development.

Nominated commissioners will start their hearings in mid-October during which Members of the European Parliament (MEPs) will question them on their competencies and vision for their portfolios. The Parliament will then vote to either approve or reject the new Commission before the new mandate begins on 1 November. Although some policymakers have suggested the new mandate could be delayed until early December, von der Leyen has insisted the new Commission must be in place ahead of the US presidential election.       

Meanwhile in France, President Emmanuel Macron appointed Michel Barnier as Prime Minister and unveiled a new centre-right government, marking a shift towards more conservative policies. The 38-member Cabinet, announced on 21 September, includes ministers from Macron's centrist alliance and the conservative Republicans party. This move followed more than two months after inconclusive parliamentary elections which resulted in a hung parliament, where the left-wing New Popular Front (NFP) coalition won the most seats but fell short of a majority. The formation of this new government has sparked protests across France, with thousands demonstrating against what they view as a cabinet that does not reflect the parliamentary election results. In turn, the new government faces challenges implementing its agenda, particularly in presenting a budget for 2025 that addresses France's financial difficulties. For investors, this political shift could signal a more business-friendly environment, with potential focus on economic competitiveness and fiscal discipline, but also carries risks of political instability due to the fragmented parliament and ongoing protests against the new government's composition, though risks of political instability remain due to the fragmented parliament and ongoing protests over the government's composition.

In this month’s German regional elections in Thuringia and Saxony, the far-right Alternative für Deutschland (AfD) party made significant gains, winning its first major election since World War II in Thuringia with roughly 33% of the vote, and coming a close second in Saxony. While the AfD's success marks a historic shift in German politics, other parties have ruled out forming coalitions with them, making it unlikely that the AfD will govern in either state despite their electoral victories. Notably, in the Brandenburg state election, Chancellor Olaf Scholz's Social Democratic Party (SPD) narrowly held off the far right thanks to centrist Christian Democratic Union (CDU) encouraging its voter base to strategically back the SPD as a way to stave off the rise of the AfD. Together with a surprise surge in votes coming from the leftist Alliance Sahra Wagenknecht (BSW) in the recent elections, the results tell us two things about wider German politics: A credible coalition partner for Scholz now appears in the form of the BSW, and in a similar pattern to French legislative elections, centrist parties are doing all they can between them to minimise the far right’s electoral gains.

Austria held its general election at the end of September, with the far-right Freedom Party (FPÖ) emerging as the winner, followed closely by the conservative Austrian People's Party (ÖVP). The shift towards a likely more Eurosceptic government could potentially affect future investments in alternative energy sources and related infrastructure, as well as alignment with the EU’s decarbonisation targets. From an infrastructure standpoint, the election results have raised concerns about the future of Austria's energy policy, particularly the country’s efforts to diversify its energy supply and accelerate its transition away from Russian gas.

For information on how you or your company can get involved in our advocacy work, get in touch with our Membership Officer Sophia Taylor, or email any of our Policy & Public Affairs team via the links above.