UK woos Chinese capital for infrastructure revamp
The British government is stepping up its courtship of potential Chinese investors in UK infrastructure projects, promoting low tax rates and steady returns as the country's own construction sector struggles in an economy teetering on the brink of a triple-dip recession.
Paul Deighton, Britain's Commercial Secretary to the Treasury, told the Post yesterday that Britain is cutting its rate of corporation tax to 20 per cent in 2015 from 23 per cent currently.
He said: "[That is] the lowest among the G20 countries, sending a clear message to foreign investors who are interested in modernising our economic and digital infrastructure projects, including power stations and [the] broadband network."
Deighton, a former chief operating officer at Goldman Sachs in Europe and chief executive of the London Organising Committee of the Olympic Games, said: "In my perfect world, those investors might be interested in participating during the construction phrase, but it may take a few more years before they are comfortable with the risk."
Construction activity in the UK was 7 per cent lower in February than in the same month last year, and work on new projects was down 10 per cent following an unusually severe and prolonged winter.
Deighton said infrastructure projects with an emphasis on energy - nuclear power, onshore and offshore wind power, and gas generation - would be worth more than £300 billion (HK$3.56 trillion) and would be paid off over the next 15 years, generating "enormous investment opportunities" for Chinese sovereign wealth funds and private companies.
He cited Li Ka-shing's forays into the UK's utilities market as an example of where the "smart money" is and said other investors should follow, as overall returns in such low-risk businesses offered "a double-digit return in many cases".
"The low-risk nature of [utilities infrastructure] has been well run on the cost side, generating meaningful upside potential," Deighton said.