Infrastructure spending: good for politicians, bad for Britain

Spending vast sums on new infrastructure projects might provide a useful short-term boost to the economy and politicians' egos, but by adding to our debts it will only make things worse for the country, says Matthew Lynn.

It certainly sounds impressive. A massive barrage across the Severn Estuary would capture tidal power and turn it into electricity. It could generate 5% of Britain's power needs and in a way that was environmentally friendly. Last weekend there were reports that the prime minister, David Cameron, had asked ministers to examine the scheme's feasibility. The government needs something that looks like a growth strategy, and it needs it fast. Infrastructure fits the bill.

With the downturn stretching into its fifth year, and looking more like a depression, it is no surprise that the government is grasping for big building projects to kick-start an economy that seems permanently stuck in first gear with a constant risk of slipping into reverse. The Severn Barrage is one of several mega-projects that may be given the go-ahead soon. A new London airport is also on the cards. So is a high-speed rail line from London to Manchester.

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Matthew Lynn

Matthew Lynn is a columnist for Bloomberg, and writes weekly commentary syndicated in papers such as the Daily Telegraph, Die Welt, the Sydney Morning Herald, the South China Morning Post and the Miami Herald. He is also an associate editor of Spectator Business, and a regular contributor to The Spectator. Before that, he worked for the business section of the Sunday Times for ten years. 

He has written books on finance and financial topics, including Bust: Greece, The Euro and The Sovereign Debt Crisis and The Long Depression: The Slump of 2008 to 2031. Matthew is also the author of the Death Force series of military thrillers and the founder of Lume Books, an independent publisher.