The British government may soon underwrite infrastructure projects to drive job creation and economic growth – this is available under the U.K. Guarantee Scheme which has been used just once in 15 months. Under the U.K. Guarantee Scheme the government can underwrite up to 40 billion pounds or $65 billion of investments up to 2016.
According to the sources some likely major beneficiaries are energy, road and rail projects worth 33 billion pounds or $53 billion which is quite significant growth i.e. up 12 percent from 29.5 billion in June. Earlier Finance Minister George Osborne announced the policy in July 2012 and decided to underwrite 75 million pounds of funding on the 700-million- the conversion of Drax power station.
Helius Energy Plc’s Avonmouth biomass energy-generation project in southwest England, the Islandmagee gas storage project in Northern Ireland, two Intergen NV gas-fired power generation projects in Lincolnshire in eastern England, and the Gateway Energy Centre in Essex, the Neart Na Gaoithe wind farm in Scotland, etc. are some projects that prequalified.
Earlier last year, the U.K. government then had unveiled a new U.K. Guarantees scheme to dramatically accelerate major infrastructure investment and provide major support to UK exporters. Then up to £40 billion worth of projects that were ready or nearly ready qualified and benefited.
Now, the British government is mulling a plan to guarantee 33 billion pounds ($53 billion) of infrastructure projects; however, this time the majority of them will be from the energy sector. Reportedly, the 40 road, rail and energy projects have been sorted out for the government to act as guarantor.
In the second process the government will do a due diligence and ensure that any decision is reached after discussions and assessment for any anomaly. The UK Prime Minister David Cameron sincerely thinks that there is a need for investment in aging infrastructure amid projection that the U.K. can overtake Germany as the EU’s most populous country by 2045.
A lot of the U.K.’s population will then comprise of emigrants. The country will need many more houses and excellent infrastructure to remain an attractive destination. According to the Chief Secretary to the Treasury Danny Alexander, getting infrastructure right means the country can be globally competitive, boost growth and create jobs across the U.K.
He also adds that he hopes today’s announcement will encourage even more businesses to consider how they can take advantage of a guarantee. Under the new scheme the government guarantees would cover a proportion of the capital value of the project should companies fail to obtain private funding.
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