Henry Nicholls/AFP/Getty Images
The new high-speed rail line from London will end in Birmingham after the UK government canceled plans to extend it to Manchester.
London
CNN
—
In 1825, the world’s first passenger train began operating in the north of England. This marked the beginning of a railway era that transformed the country’s economy by reducing travel times, boosting trade routes and connecting major cities.
Two centuries later, the United Kingdom has only just abandoned its project – in the works for 15 years – for a high-speed rail network linking London to the north of England.
This puts the UK in a serious situation disadvantage compared to most of the world’s other advanced economies, many of which enjoy the benefits – financial and environmental – of high-speed rail.
Prime Minister Rishi Sunak’s decision to scrap High Speed Two (HS2) due to skyrocketing costs is just the latest example of Britain’s economic decline, and it confirms a reality painful: the country apparently can no longer spend big on this type of project that Germany, France and Italy (not to mention China or Japan) are still able to carry out.
I should declare a personal interest. My great-great-grandfather was one of the drivers of the Flying Scotsman – at the time the fastest steam train in the world – on a record-breaking journey in 1928 from London to Edinburgh. So I feel strangely saddened by the decision to cancel this project. to build the Birmingham-Manchester high-speed line. (The stage to Leeds had already been abandoned.)
To be sure, there will be some compensation for northern cities that won’t benefit from the jobs the massive construction project would have generated, not to mention the business investment that faster passenger and freight train travel would have attracted. Sunak declared £36 billion ($43.7 billion) Savings would be redirected to new transport projects in the English Midlands, the north of the UK and elsewhere.
“Our plan will generate far more growth and opportunity here in the North than a faster train to London ever would,” he said on Wednesday.
But a thriving economy might not have had to choose between the two, and new projects will take years to develop, let alone come to fruition. Some of the alternatives put forward by Sunak relied on the delivery of HS2, said Henrietta Bailey, CEO of the Greater Birmingham Chambers of Commerce.
Sunak’s latest U-turn on a strategic initiative – a year ago he committed to HS2 – has managed to unite business leaders, unions and some of his political allies (including former conservative prime ministers) in condemnation of the decision. They also warned of a loss of credibility with investors.
“This is the largest and most damaging U-turn in the history of British infrastructure,” the High Speed Rail Group, which represents companies including Siemens, Hitachi and Bombardier, said in a statement. “Every other major European country has successfully built a high-speed rail network, recognizing that it is an essential part of a modern society and economy for years to come. We would like to think that Britain still could.”
British manufacturers are mourning the loss of revenue they could have earned from the project and future business opportunities.
“The decision… sends an extremely disappointing message about our commitment to delivering major infrastructure projects in the UK,” said Stephen Phipson, chief executive of Make UK, which represents manufacturing companies.
Mark Allen, chief executive of property group Landsec, said the root of the problem was “less to do with the details of what HS2 will or will not bring to the economy. Rather, it’s about what it says about our ability, or lack of ability, as a country to deliver large infrastructure projects.
Sunak has worked hard to restore the UK’s credibility since it was gutted this time last year when his predecessor – Britain’s shortest-serving prime minister, Liz Truss – sent sterling tumbling and UK government bonds. Investors abandoned his plan for sweeping, unfunded tax cuts back in front.
Now he has his own tryst with reality. After the UK Treasury pumped money into the economy to support businesses and households during the pandemic and energy crisis – gifts Sunak oversaw as finance minister – its cupboard is empty.
Since the pandemic hit in March 2020, UK public debt has jumped 40% to almost £2.6 trillion ($3.3 trillion), exceeding 100% of national income for the first time since the start of the 1960s. And the nature of this debt adds to the agony: almost a quarter of this debt is linked to inflation. As prices climbed last year, reimbursements also increased.
Britain spends more on debt servicing than any other developed economy as a percentage of government revenue, and borrowing costs are rising again. The yield on 30-year government bonds, or gilts, this week rose to a 20-year high, even higher than during Truss’s tenure. The UK remains stuck in what its fiscal watchdog described earlier this year as “very risky times for public finances”.
As crumbling public services from health to education desperately need more money and an election looms, Sunak blinked, taking the machete to billions of dollars, as a scalpel would no longer be enough.
The country must hope its latest policy U-turn does not deter investors and further undermine a struggling British economy, perpetuating a doomsday loop of low growth and underinvestment.
Business leaders are not optimistic.
James Mason, chief executive of the West and North Yorkshire Chamber of Commerce, said a decade of promises that would have delivered “life-changing infrastructure upgrades” had been reversed in one fell swoop.
“We are now left with the same old Victorian rail network, which simply will not have the capacity to meet demand over the coming decades. »
— Hanna Ziady contributed to this article.
