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Q4 pulse survey shows UK must ‘make up ground’ in global race for private finance for infrastructure

As the world’s leading investors rate UK as having ‘negative’ appeal for the first time, the Autumn Statement provides a major opportunity to restore investor confidence

The attraction of the UK as a destination for private investment in infrastructure has tumbled to a new low, according to the Q4 2023 Pulse survey of the world’s leading international investors by the Global Infrastructure Investor Association (GIIA) and Alvarez & Marsal (A&M).

The sharp fall versus other markets reflects continuing investor concerns over the UK’s political and policy stability and perceptions of an unattractive regulatory regime. The country has become the first in western Europe to enter negative territory in the survey, outstripped by long-term leaders in attractiveness including Germany, Denmark and France, as well as the US, the world’s number one destination.

The loss of confidence comes ahead of the Autumn Statement, in which Chancellor Jeremy Hunt has promised action to increase the UK’s investor appeal.

Last month the National Infrastructure Commission – in its five-yearly assessment of the country’s infrastructure needs - called on the government to provide policy clarity, pro-investment regulation and speedier planning decisions.

GIIA chief executive Jon Phillips said:

“The UK once set the gold standard for privately financed infrastructure, and early last year was still seen by investors as the most attractive investment destination in Europe.

“The Autumn Statement is a vital opportunity to make up lost ground. Regulatory reform that incentivises long term investment and a commitment to speeding up planning decisions are the top asks of infrastructure investors.

“The UK cannot compete fiscally with the incentive packages offered by the European Union and United States. But the government can turn the tide by delivering a stable and appealing investment environment that attracts the billions of pounds needed to finance climate change resilience and net zero commitments.

“Investors would welcome the government delivering on its promises to respond to the challenges of the Inflation Reduction Act in the US, and to begin planning reforms – such as updated National Policy Statements for the transport, energy and water sectors - before the end of the year.”

Recent factors weighing on sentiment include changes to UK net zero policies, a renewable energy auction that yielded no new bidders for offshore wind capacity, and out of date regulatory frameworks that fail to incentivise the scale of capital investment the UK now needs to attract.    

In addition, the UK has had five prime ministers since it voted to leave the European Union in 2016, and investors await the outcome of a badly needed review of economic regulation launched by former Chancellor Kwasi Kwarteng nearly two years ago.

On paper, the UK should be an attractive market for infrastructure investment given the size of its economy, commitment to the rule of law, longstanding openness to private capital, and expertise of its institutions and world-leading professional advisory firms.

But investors perceive a lack of strategic direction and vision for sub-sectors like water, energy and rail. Together with a consistent failure of regulators to foster investment and growth, especially in utilities, this has pointed international investors towards opportunities in other markets.

Following recent meetings with ministers and officials, GIIA is cautiously optimistic that the Autumn Statement may start to reset perceptions.

Chief executive Jon Phillips added:

“Now, more than ever, is the time for decisive action from the government to assure investors that the UK is a favourable landscape for long-term, sustainable investment.

“We believe the government has listened and understood the need to send clear signals to the investor community that their capital is welcome. Key to this will be evidence of a more joined up strategy for attracting infrastructure investment across government departments." 

By contrast with the UK, the survey finds that the United States leads the way for infrastructure investors as the most attractive destination worldwide, buoyed by the huge incentive packages of the Infrastructure Investment & Jobs Act and Inflation Reduction Acts. Renewable power generation and data centres are the two US sectors that are most attractive to infrastructure investors, along with airport upgrades.

In mainland Europe, the most appealing locations include Germany, Denmark and France. Energy and transport technologies are among most attractive areas for investment, including battery storage, electric vehicle charging networks, and rail and rolling stock.

Read and download the full report at the top of this page.