Osborne set to unveil £50bn infrastructure investment plan
Radical plans, to be unveiled by Chancellor George Osborne, will see the government underwriting £50billion of investment in UK infrastructure and exports.
The move has been announced following the cutting of the country’s growth forecast to just 0.2% for 2012 the IMF earlier this week. That decision itself was taken amidst growing pressure on ministers to support the economy by “loosening the purse-strings”.
The Chancellor is set to announce three different schemes that will make up the £50billion. The largest project will be UK Guarantees, in which the government will secure the debts of companies it deems “nationally significant” but who have been unable to progress because developers aren’t able to raise the necessary funds.
Osborne believes that this measure alone could raise up to £40billion in certain sectors. Schemes likely to be accepted are plans such as the Thames Tideway – a 15 mile long sewage tunnel the width of three London buses.
The government will also introduce a temporary lending programme, which will enable projects such as housing, hospitals or schools to go ahead. It will also guarantee loans for British exporters.
Mr Osborne has said that the public will benefit from the scheme, explaining:
“The credibility the government has earned through tackling the deficit is already helping millions of British families… Britain’s credibility has been hard-won and involved difficult decisions, so I want to make sure its benefits are passed on to the whole economy.”
However, critics are concerned that the measures aren’t going to be far-reaching: “With Britain in a double-dip recession because of the Chancellor’s failed policies, anything which helps to get the economy moving again is welcome. But these proposals do not go far enough,” Shadow Chief Treasury secretary Rachel Reeves commented.
“There is no guarantee that government-backed loans will see any infrastructure projects going ahead in the next year and they will not reverse the damage done by two years of deep cuts,” said Reeves.