Debunking Economics - the podcast
Britain’s capex crisis and how to fix it
Oct 30, 2024
The podcast dives into Britain’s capital expenditure crisis, revealing how underinvestment is fueling potholes and train breakdowns. It contrasts the UK’s 6% of GDP in capex with much higher rates in the US and China. The hosts discuss the shortage of engineers and the pressing need for STEM education. They suggest freeing capex funds from budget constraints to prioritize long-term infrastructure projects. Additionally, the conversation critiques traditional cost-benefit analyses and explores the transformative potential of strategic public-private partnerships.
45:31
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Quick takeaways
- Britain's capital investment is critically low, with only 6% of GDP allocated compared to 22% in the US, hindering infrastructure growth.
- Government adherence to balanced budgets limits necessary long-term capital expenditures, thereby stifling the UK's economic growth and infrastructure quality.
Deep dives
The Need for Increased Capital Investment
The discussion highlights the critical need for increased capital investment in the UK to stimulate economic growth. Comparing the UK's capital expenditure (CapEx) against other countries, it is noted that the UK lags significantly, with only about 16% of GDP allocated to CapEx, whereas nations like the US and Germany invest around 22% and 20% respectively. The presenters emphasize that without adequate investment, both public and private sectors cannot effectively grow or compete globally. This lack of investment is presented as a primary factor contributing to the UK's economic stagnation and decline.
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