“There is growing realisation that governments in Europe have underinvested in public infrastructure. The European Commission’s new three-year €315 billion investment plan announced at the end of 2014 acknowledges the need to reverse this trend as well recognising that governments face fiscal pressures that inhibit economic growth. In the EU, investment last year was 15 percent or €430 billion below pre-Crisis levels. The EC has identified €1.3 trillion of potential investments – 2,000 projects in total – of which €500 billion should be shovel-ready in the next three years. Given these dynamics, Standard & Poor’s expect public-private partnerships as well as economic infrastructure (transport and energy) projects to dramatically increase in 2015.
That said, the speed in which any given economy grows can be regionally dependent. Public acceptance, the strength of supporting laws and regulations, as well as the amount of available government funds and private financing can all influence growth. As a result of intense competition among banks and long term institutional investors to fund infrastructure projects in Western Europe we expect to see more investors turning to less-developed markets in Eastern Europe, to search out less competitive opportunities, next year. In addition, we see Southern Europe making a comeback in 2015. Although mainly through the refinancing of existing transactions, Spanish and Italian projects are beginning to re-emerge, in part due to the banking sector's recovery and increased appetite for lending to the infrastructure and project finance sector.”
Mike Wilkins is a managing director and head of infrastructure at Standard & Poor’s Rating Services.