Fast-train UK hopes for some Olympic speed
By Ian Campbell
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The unthinkable has happened. The UK, traditionally associated with trains that stop all too often, is going ahead with a high-speed railway. Another sort of speed, of the Olympic variety, may mean the UK as a whole runs a bit faster than expected this year.
The decision to spend 32.7 billion pounds on a high-speed rail network is right. Faster transport assists economic integration and development. Quicker links to London will help the depressed Midlands.
The government is on the right track. It is cutting public expenditures which are less than useful while looking to increase investments for the long term. A brand new London airport would be another good idea.
But the fast track construction will be slow at best. If plans overcome obstacles, the big spending won’t begin for years. For now, the UK must cope with the loss of 193,000 public jobs in March to last September, more than enough to take steam out of a slow-moving economy.
Yet Christmas was not unmerry. The British Retail Consortium reported December retail sales 4.1 percent higher than in the previous year – the best month since January 2011. And purchasing managers in manufacturing and services were the most active in December since July. Low interest rates are helping British home-owners who remain employed.
The year just starting has its better side for consumers. Unlike in previous Januaries, there has been no increase in VAT. That will mean a marked fall in the inflation rate this January – to around 3.5 percent. And inflation should continue to fall, so that consumers won’t keep finding their incomes lagging well behind.
Meanwhile, more than the usual number of consumers will be imported. Tourist arrivals in 2012 are set to be high. The Queen’s Diamond Jubilee should draw many American visitors. The Olympic Games will also spur tourism and retail spending.
Many hurdles remain. The housing market is still depressed, the government is still cutting and the UK’s largest trading partner, the euro zone, has troubles that could easily spill into UK banks. But from a slow start the UK could accelerate this year, towards a recovery that future investments can enhance.