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Infrastructure spending drops following Brexit vote

2000 infrastructure

A leading construction consultancy has warned that infrastructure spending in the UK has declined sharply since the vote to leave the EU.

The Financial Times has reported data from Barbour ABI indicating that the value of contracts for July had fallen to £1.5bn, which was 20% lower than in June and a 23% decline year-on-year.

London won a third of the new infrastructure projects awarded, accounting for 34.3% of work by value.

Barbour ABI, which also provides figures to the Office for National Statistics, suggested that public and private sector projects were being put on hold as the result of a general economic uncertainty following the EU referendum.

On 10 August, support services and construction company Interserve confirmed its intention to leave the energy-from-waste sector when six projects currently underway are completed next year.

The decision was attributed to the complexity and problems in the projects, with additional factors pushing the company into a £34m half-year loss.

Previous figures from the Office for Budget Responsibility indicated that net public sector investment was in decline before the vote to leave the EU, with a fall from £51.5bn in 2009 to £33.2bn in 2015-16. Government forecasts expect it to fall further until 2020.

The report is expected to increase pressure on Theresa May’s Government to support new infrastructure projects, especially after the decision to put the Hinkley Point C nuclear power project on hold.

Barbour ABI chief economist Michael Dall argued that the Government should take advantage of historically low interest rates and invest in big new infrastructure projects that could play a “pivotal role” in boosting economic performance and creating employment opportunities.

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