Large scale project spending set to soar

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Posted by APM on 25th Jun 2014

Large-scale projects
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UK spending on large-scale projects is expected to rise by 60% in the next 10 years.

According to a new report by PwC, spending on power and water projects will more than double from a current £11bn to £27bn per year while transportation projects will see similar increases from £12bn to £23bn annually.

The UK analysis is part of a new PwC report Capital project and infrastructure spending: Outlook to 2025 which focuses on global capital project and infrastructure spending.

Richard Abadie, PwC’s global leader of capital projects and infrastructure (CP&I) said the spending would be critical to maintain the UK’s global edge.

He said: “It is telling that social infrastructure spending accounts for about a third of total spending currently despite the perception of cutbacks in this area.

“Nevertheless, we expect transport and power to be the growth sectors up to 2025 with transport doubling and power generation nearly tripling. This spending will be critical to ensuring economic growth in the UK and global competitiveness."

Richard added that the UK government will also have to rely on increased private investment to fund these projects.

He added: “Private investment, whether from pension funds, insurance companies, sovereign wealth funds for example, will be the dominant financing source for this spending as government has signaled previously.”

The report added that the UK's overall spending should keep pace with other major European economies with total spending reaching £106bn by 2025.

The report looked at 49 of the world's largest economies which account for 90% of global economic output, covering the extraction, utilities, manufacturing, transport and social infrastructure sectors.

Ronan O'Regan, director, PwC energy, said: “Of the level of spending projected for power generation, this will be spread across renewables, other low carbon projects such as nuclear/carbon capture and storage and thermal gas fired generation. We expect that more than half of the spend will be on renewables, with the balance spread across other low carbon and gas plant.

“Policy certainty is required to give investors the confidence to make these long term investment decisions. Electricity market reform goes some way to providing this policy certainty through to 2020, although the path to 2025 and beyond is still subject to some uncertainty.”

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