UK top infra investment destination

Australia in second place in the Nabarro Infrastructure Index

The United Kingdom is the most attractive country for infrastructure investment out of 20 countries ranked across five major world regions, according to a report commissioned by international law firm Nabarro and conducted by London-based Opinium Research.

France and Germany – placing third and fifth, respectively – gave Europe the lead overall, while Australia landed in second place and the US featured fourth in the Nabarro Infrastructure Index.

The factors used to arrive at the results took into consideration: the countries’ tax environment, availability of credit, legal environment, ease of doing business, private sector participation in infrastructure activity, environmental performance, ecological sustainability, and innovation.

The UK scored highest in the ease of doing business category at 95 percent, one of the highest scores overall. In terms of sustainability and innovation, it scored 93 percent, while private sector participation in infrastructure projects received a score of 74 percent. The country also had among the highest scores in the credit and stability sub-index at 66 percent – falling only behind China at 72 percent.

The positive results, however, do not mean that infrastructure investment in the UK is not without challenges.  The austerity that followed the 2008 financial crisis is one of the obstacles the country’s infrastructure market faces.

“Given recent policy initiatives, such as the National Infrastructure Plan of November 2011 and 2013 UK Budget Infrastructure Delivery Update to boost the sector, we may see that the infrastructure sector is a net winner,” Nabarro partner and head of infrastructure Matthew Jones said in a statement, provided these initiatives are implemented successfully.

“However, the UK needs to make sure it has a favourable enough tax and regulatory environment to maintain its place at the top of the list if it wants to be there next year,” he urged.

The UK’s lowest score – 26 percent – was in the tax environment sub-index, which placed the country in the company of the US, most of the BRIC countries – with the exception of Russia which was even lower at 0 percent – Israel, Italy, Qatar, and Jordan, among others.

An unfavourable tax and regulatory regime and a not so easy environment for doing business are also the main reasons why the BRIC nations are not meeting their growth potential in terms of foreign investment in infrastructure. However, Brazil remains a country to watch “as it has an ambitious $66 billion stimulus plan, which is a significant commitment to upgrading the country’s infrastructure,” noted Jones.

In the Middle East and North Africa region, Israel emerged as the most attractive, placing 11th, followed by the United Arab Emirates in the 12th position, and Qatar in 15th. While none of the Middle Eastern countries made it into the top 10 of the index, they are spending more on infrastructure than their European counterparts, “with Qatar allocating 12 percent of its GDP [gross domestic product] towards infrastructure spend ahead of hosting the 2022 World Cup,” according to the law firm.

Please find the full league table below.

Nabarro table