ICE vice president Geoff French has warned that the UK’s grim economic position may be the new reality and urged firms to look overseas for income growth.
French, speaking at an ICE East Midlands organised breakfast briefing Living with zero domestic growth - the challenge for the UK, outlined the current economic situation and explored the implications and possible solutions for infrastructure funding.
He explained how the current situation since the economic downturn began in 2008 is not typical of the boom/bust cycle usually seen in the UK and warned of the danger that zero/low growth may be the new reality, especially since the current size of government debt makes further cuts to public spending very likely.
His assessment was borne out by figures released by the Office for National Statistics which show that the economy shrank by a further 0.3% in the first quarter of 2012 and that government debt is increasing and looks to do so for some years.
The construction sector has been particularly badly hit – the first quarter of 2012 saw a 4.9% reduction in spending – the sharpest fall since the beginning of the current recession.
Yet, the UK’s network of infrastructure – the energy, transport, water, flood protection and waste management systems on which we all depend, require funding for renewal and replacement.
French argued that to secure this funding, it is vital that engineers successfully promote the case for funding of infrastructure projects, projects which underpin the nation’s and the region’s economy and that alternative sources of funding are pursued, from both public and private sources.
“With the danger that the economic situation we are currently experiencing is the new reality, there is huge competitive pressure for central government funding. Infrastructure must compete for funding with the benefits, health, education and defence sectors,” he said.
“It is vital, therefore, that engineers look to all possible sources of funding: from government, local authorities, LEPs and public private partnerships and make a strong case for funding of infrastructure, which is critical to our society and economy.”
Engineering companies should also look to increase their turnover on services provided outside the UK in order to generate income and, in turn, boost the economy.
More than 50 delegates, made up of an audience of senior ICE members from the region and key regional influencers and decision makers attended the event in Kegworth last Friday. The meeting was hosted by ICE East Midlands regional chairman Robert Armitage.