The Impact of Short-Term Thinking on UK's Growth Projects Like HS2 and Heathrow

Short-term thinking has become a significant hurdle in enhancing the British economy, with the market's quarterly reporting system fostering a climate focused on immediate results rather than future possibilities. Such impatience results in missed opportunities for long-term investments that could substantially benefit the UK's productivity and growth.

The Pitfalls of Short-Termism in British Econonmy

Quarterly reporting expectations and a preoccupation with prompt outcomes mean companies and investors in the UK are often too eager to sell or move abroad when faced with the slightest hint of trouble. This lack of long-term commitment is a sharp contrast to companies like Amazon, which waited nine years after becoming publicly-listed to turn its first profit, highlighting the success that can come from perseverance and a long view.

The Consequences for Public Investment

The UK's Treasury is so preoccupied with maintaining a balanced budget that it hampers its ability to invest effectively for future generations. Even in public affairs, the tendency towards short-term planning is evident, with frequent adjustments to the nation's fiscal policies that no other Western democracy feels necessary outside of crisis conditions. This affects the delivery of significant infrastructure projects, which require tenacity and acceptance of challenges, such as cost overruns and delays.

Case in Point: The Rail Projects and Heathrow Expansion

When examining key infrastructural initiatives, like HS2 and Heathrow's third runway, we see the stark effects of short-termism. HS2, initially an ambitious rail project set to connect the North and South, has been reduced to a mere section between London and Manchester following cost concerns and Treasury pressures. The significant economic advantages, such as the regeneration and investment they could have brought, are now at risk of being unrealized.

Similarly, Heathrow's third runway has been shelved, possibly due to the fear of it becoming a contentious election issue, despite the imminent capacity constraints of Britain's leading airport. Short-term gains are once again favored over long-term national benefits, potentially steering commerce away from the UK towards cities with better runway capacity.

Looking Towards Long-Term Private Investment

Despite the inclination towards maintaining current financial stability, there has been some movement towards promoting long-term private investment, exemplified by the Chancellor's implementation of the permanent 'full expensing' regime. However, large-scale, growth-driving public projects remain at risk of being abandoned entirely.

Short-Termism, Economy, Infrastructure