Train journeys in the UK have sky-rocketed since the early 1990s while investment has failed to keep pace, explaining why commuting on the train can be such an over-crowded, horrible experience.
Two charts from HSBC included in a recent note neatly underline the problem with the UK’s rail network.
First, flat-lining investment:
Rail investment has basically remained range-bound at between 0.3-0.4% of GDP from the late 1990s onwards. That might be fine if demand was stable and it was just an issue of maintaining the railways.
But guess what — that is not the case! Chart two shows passenger numbers have rocketed since the early 1990s:
The surge in train travel coincides the introduction of the rail franchising system in the late 1990s. A report last year found the number of train journeys made each year has doubled since 1998 when private operators took over the running of the UK train network from British rail.
But the UK’s railway system has not evolved at the same rate. In recent years Network Rail, which is responsible for maintaining the train lines, has had its budget cut by the government, which was trying to balance its own books. Most of its spending on the rail network has also gone on maintaining and fixing parts of the network, rather than upgrading.
HSBC think it is time to change all this.
In a note sent to clients on Monday titled “When uncertainty reigns, look to Keynes,” chief UK economist Simon Wells and economist Liz Martins argue that the government should start spending on infrastructure projects to boost economic growth and combat the expected Brexit slowdown.
Wells and Martin say:
“UK infrastructure investment has been low by international standards over the past 20 years (Chart 5). Investment in roads (as a percentage of GDP) has fallen since the mid-1990s (Chart 7), although road journeys have flattened off. But rail investment has remained fairly constant despite a massive rise in passenger numbers (Chart 8). Demands on the rail network are projected to rise further. The new National Infrastructure Commission predicts that the number of London commuter journeys in “crowded conditions” will rise by 50% by the 2030s.”
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