Analysis: Austerity threatens EU's competitive edge in infrastructure

Thu Mar 28, 2013 4:53am EDT
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By Anthony Deutsch

BERLIN (Reuters) - Europe's carefully maintained autobahns, high-speed TGV trains and vast network of modern airports have long been the envy of the world.

But thanks to austerity budgets that are slashing infrastructure spending just as other parts of the world are ramping it up, that may not be true for much longer.

European infrastructure spending rose just 1.5 percent last year to $741 billion, compared to global growth of 4.5 percent and a 7.1 percent rise in the Asia-Pacific, according to data compiled by Marketline, a business information provider.

Spending in Europe will increase slightly over the next four years, to 4.3 percent growth by 2016, Marketline told Reuters, but will continue to significantly underperform the world average. Only the United States will do worse, with growth of just 1.8 percent seen in 2016.

Company executives, trade groups and even European Union officials themselves say the region is in danger of falling behind competitors, with possibly irreversible consequences.

"We are out of pace with other parts of the world. We are not rejoicing," said Harold Ruijters, who leads the Transport Commission's Trans European Network unit, which aims to connect Europe's fragmented railways, roads and airports.

Brussels' main infrastructure funding budget, the Connecting Europe Facility, was cut in the latest EU budget announced in February from an originally allocated 50 billion euros to 29.3 billion euros over the next seven years.

Broadband and digital infrastructure took the biggest hit, cut from 9.2 billion to just 1 billion euros.   Continued...

A heavy traffic is pictured on a snow covered motorway in Bochum February 6, 2013. REUTERS/Ina Fassbender