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Time for a global investment prospectus for the UK

It is interesting that the second most important financial statement of the year, the autumn statement, has been postponed because the prime minister is leading a trade delegation to China.

While some may argue that this shows the government is too keen to please the Chinese, a more positive interpretation is that it shows the government is working hard to keep the UK at the heart of international investment.

Investors in infrastructure assets look for opportunities globally. There are many active markets – some mature such as the UK and Canadian markets and others emerging – the US P3 market is still developing, as is the market in India. And so the trick is to make one’s own infrastructure market more appealing than everyone else’s.

According to recent figures from the Asia Development Bank and the Organisation for Economic Cooperation and Development, Asia alone is estimated to invest $8 trillion in infrastructure projects from 2010 to 2020.

The UK is seen as an attractive investment destination – it is stable, safe and transparent. We have seen considerable activity in relation to the acquisition of major infrastructure assets over the last 12 months and beyond from international players. Global interest has been created in our utilities, our airports, our energy assets and our social and economic infrastructure, particularly in terms of the acquisition of investments in PFI Projects. And not only from China.

The Republic of Korea is also eyeing up Britain’s infrastructure market. President Park has outlined four strategic sectors for collaboration between Britain and the Republic of Korea: creative industries, infrastructure, energy and healthcare. Potential investment by the Republic of Korea could further boost infrastructure investment considerably over the next five years

But what of investment opportunities relating to new infrastructure? Are we still leading the world in that market?

The forthcoming trade mission to China is intended to pave the way for a new level of investment into the UK. A significant amount of new investment could pour into Britain from China before 2020, with infrastructure and real estate high on the list of must have assets.

But courting the Chinese is not the only evidence that the government wants to maximise international investment in the UK. The recent announcement that the UK is intending to be the first country outside the Muslim world to issue a Shariah-compliant bond, possibly as soon as next year, is another clear statement of intent.

And then there is the UK Guarantees Scheme, announced in July 2012 and most recently identifying road, rail and energy projects with a combined value of £33bn passing the first hurdle to attracting a Treasury Guarantee.

It must be the intention that the scheme will have the same positive impact on infrastructure as other government-backed initiatives have had on the housing sector.

But we don’t have sufficient clarity over what the investment opportunities are and when they will realistically materialise. This is a potential barrier to foreign investment in the UK infrastructure sector.

What should we expect from the autumn statement?

As it has been moved to accommodate the prime minister’s trip to China – the trip to prepare the way for a new level of Chinese investment into the UK - maybe it will deliver more than we’re used to seeing. Maybe it will clearly set out the scale of the investment opportunity to reassure the Chinese (and, frankly, all the other UK and international investors out there) that we are the right choice, that we are still a highly attractive investment destination and that people should invest their money here not elsewhere.

And if showing this commitment to the Chinese drives that outcome that should be celebrated the length and breadth of this country and beyond these shores.

Previous budgets and statements have been disappointing for the infrastructure investment community as whilst they heralded a commitment to the sector they delivered little in terms of “shovel ready” projects or a clear pipeline of opportunities. The National Infrastructure Plan has been restated a number of times but often with a rehash of old projects or opportunities which have no investment angle to them.

If we are to maximise on the interest the government is generating in investing in the UK we need the chancellor to deliver a blueprint for investment by setting out the opportunities and a timetable for delivery. Without that, we run the risk of international investors looking to other jurisdictions. With it, the UK will remain a world leading infrastructure investment destination.

Let the autumn statement be George Osborne’s prospectus for global investment in the UK.

Kate Orviss is an infrastructure partner at Pinsent Masons

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