ULI and Ernst & Young’s Infrastructure 2012 annual report into the state of global infrastructure highlights the impact of recession on worldwide infrastructure funding.
The sixth report in the series, Infrastructure 2012: Spotlight on Leadership, offers a global perspective on the challenges and examines examples of infrastructure leadership.
Six regions in North America are examined together with reviews of projects underway in Europe, China, India and Brazil. These latter three countries are engaged in infrastructure investment on a scale unthinkable in most developed countries, but continuing economic doldrums, labour constraints, and bureaucratic challenges are putting the brakes on Chinese, Indian, and Brazilian infrastructure aspirations.
In Europe, nations are struggling to move forward
with catalytic infrastructure investments in light of the global economic
downturn and the European financial crisis. Although, like in previous years
the 2012 report stresses that the U.S. continues to lag behind its global
competitors in infrastructure funding, it also points to a marked spending
decline in Europe.
Commenting on the report Ernst & Young LLP’s Global Real Estate Leader Howard Roth, said: “Europe, like the U.S., is struggling to bolster deteriorating decades-old systems, and is retreating on investments in major improvements after leapfrogging the U.S. on high-speed rail and other signature transportation projects.
“In both the U.S. and Europe, the era of massive
infrastructure investments may be over. Although local governments may have
success in doing more with less, the overall state of the infrastructure in
these nations will deteriorate unless the political will and funding to make
the needed investments materialises.”
Report found that:
- In the United Kingdom, private finance approaches are under fire at the same time that fiscal austerity is forcing the country to rethink infrastructure priorities.
- Europe’s depleted treasuries make new infrastructure projects look like an unaffordable luxury for now.
- Even China’s aggressive infrastructure building programme has been slowing down, along with its economy, and it has scaled back its high-speed-rail programme. Increasing internal debt, water supply, and environmental issues are pressing concerns.
- Despite spending eight percent of its gross domestic product on infrastructure, India may not be able to keep up with the needs of its exploding urban population.
- Brazil, South America’s emerging market superstar, has ambitious infrastructure development plans tied to the 2014 World Cup and 2016 Olympics, but may miss deadlines due to its weakened currency, red tape and corruption in contracting, and other issues.
- One bright spot: Canada, which has made infrastructure investments a national priority, and as a result, has an infrastructure relatively manageable deficit of no more than $125 billion. Canada’s public-private partnership ap