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one Funding and fi nancing the infrastructure pipeline

With the National Infrastructure Plan Mark III we are all very much more focused on the pipeline and delivery of the infrastructure we need. It is what the market wanted, and the plan is now in a form that we can start to do something with.

Some £375 billion of investment in infrastructure is required. A lot of the focus in the near-term is going to be investment in energy and transport. How are we going to fi nance £45 billion of investment on an annual basis over the next few years?

In my view, fi nancing is not the constraint, and hasn’t been for a number of years. Just looking back at 2013, we saw project fi nancing of about £6 billion raised, a similar number relating to acquisitions, and the same for the refi nancing of assets.

Finance is fl owing. The fi nancing market is probably as strong right now as before the fi nancial crisis. More sources of fi nancing exist than ever before. Commercial banks are back, there are a number of institutional investors waking up to infrastructure, and there’s the bond market. The construction sector has more options than ever, but has work to do to assess the appropriate fi nancing solution.

Financing may not be the issue, but funding is a challenge. How is infrastructure to be funded? Through government taxation? Or from the consumer through usage charges? The challenge may be how we diversify our sources of funding beyond these options. If the funding is there, the fi nancing will follow.

Darryl Murphy Partner, KPMG in the UK

© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.



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