AUSTERITY THREATENS EU COMPETITIVE POSITION

EUROPE WAS A LEADER IN TERMS OF QUALITY INFRASTRUCTURE

Austerity is threatening the EU’s competitive edge and the region could fall behind other areas of the world if spending is not kept up on key infrastructure projects including aviation.

Company executives, trade groups and even EUROPEAN UNION officials themselves say the region is in danger of falling behind competitors, with possibly irreversible consequences.

EUROPEAN infrastructure spending rose just 1.5 percent last year to USD$741 billion, compared to global growth of 4.5 percent and a 7.1 percent rise in ASIA-PACIFIC, according to data compiled by Marketline, a business information provider.

Spending in EUROPE will increase slightly over the next four years, to 4.3 percent growth by 2016, Marketline said, but will continue to significantly under-perform the world average. Only the UNITED STATES will do worse, with growth of just 1.8 percent seen in 2016.

Trade within EUROPE, which has a population of more than 730 million and represents roughly 22 percent of the world's cargo by value, is expected to double in the coming decade.

Brussels said in a policy paper released before the recent budget cuts that EUR€550 billion (USD$704 billion) in high-priority projects were needed by 2020 to create a core transport network to meet the increased demand.

CONCERNS THAT EUROPE RISKS LOSING ITS COMPETITIVE POSITION

The investment would connect 120 major ports and airports to rail, upgrade 15,000 km (9,300 miles) of rail tracks to high speed and remove 35 key cross-border bottlenecks. The region's railways use seven different gauges and only 20 major airports and 35 major ports are directly connected to the rail network.

The upgrades would not only make the distribution of goods faster and cheaper, but also be required to meet EU targets to reduce carbon emissions by 60 percent, halve conventional car use and shift 50 percent of long distance freight onto trains and ships by 2050.

Airline executives have been among the most outspoken about concerns that EUROPE risks losing its competitive position if it fails to implement these plans.

Paris Charles de Gaulle Airport plans to spend EUR€2.1 billion between 2011 and 2015 on new facilities, for example, while Dubai said last year it plans to invest EUR€6 billion in airport expansion by 2018 to boost capacity by 50 percent.

"EUROPE was a leader in terms of quality infrastructure," Air France-KLM chief executive Jean-Cyril Spinetta told reporters. "I am very concerned about the future, especially airports. The amount of investment in other regions is incredibly high."

Via Airwise.com