Government’s €27bn capital deemed as inadequate

The Government’s €27 billion capital plan falls short of what experts believe developed countries will need to spend on infrastructure over the coming years, according to one commentator.

Stephen Williams, divisional director, equity research with stockbrokers, Brewin Dolphin, said on Wednesday that recent research calculates that the world's developed economies will need to spend $57 trillion (€51 trillion) on infrastructure between now and 2030.

“That is 60 per cent more than the total amount spent in the last 18 years,” he said.

The $57 trillion figure, a recent estimate by consultants, McKinsey, implies spending of at least 3 per cent to 4 per cent of gross domestic product (GDP), he noted.

Economic growth

However, the €27 billion pledged by the coalition over six years would only amount to 2 per cent of GDP and may not be enough to keep pace with the demands posed by economic growth.

Mr Williams said that some countries are likely to spend 7 per cent to 9 per cent.

He explained that many developed countries are facing similar problems to the Republic’s as their economies grow.

Many of them need to increase spending in areas such as energy, transport, waste management, roads, flood alleviation in order to cater for their economies’ needs.

Mr Williams, who was speaking ahead of a conference on real estate and construction, organised yesterday at the Irish Stock Exchange by Brewin Dolphin, argued that the need of developed countries to literally build their economies should be good for construction stocks.