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Wait for new runway will cost UK trade £31bn - CBI

Business welcomes PM’s pledge to make decision before end of year and wants work to start on the ground by 2020.

Katja Hall, deputy director general, CBI

The United Kingdom could lose up to £31bn in trade by 2030 because of the failure to increase flights to the BRIC (Brazil, Russia, India and China) countries alone, according to new CBI research. 2030 is the earliest a new runway is expected to be built.

It’s research was published a few days after the Airports Commission published its final findings and lighted on Heathrow as the unequivocal best option for a new runway in the south east.

“We need to get the legal process underway before the end of the year, and Parliament needs to get behind it. If it does that, we could see spades in the ground by 2020, with a new runway online between 2025 and 2030 and the whole country reaping the benefits by 2040" - Katja Hall, CBI

If there are delays to getting new runway capacity up and running beyond 2030, the annual cost to the UK economy in lost trade with the BRIC countries alone - on top of £31bn - could be up to an additional £5.3bn, which will rise each subsequent year. “That would equate to more than £600,000 every hour. But this could be avoided, if a decision is made before the end of the year,” CBI said.

Welcoming the Prime Minister’s pledge to make a decision on the Airports Commission’s recommendations in December, the CBI said it wanted to see diggers in the ground swiftly by 2020.

Speaking at Runways UK today CBI Deputy Director-General Katja Hall, said:

“Delaying the decision to build a new runway will have a very real economic cost for our country. The commission has been clear in its recommendation to the Government, and so are we – get on with building it without delay.

“A new runway will help rebalance our economy, prevent us handing opportunity to our rivals and avoid a future bill for our inaction.”

The cost of delay or doing nothing to the British economy will be very real she said. “When it comes to airport capacity – time is money. We’re not just missing out on global opportunities, but paying an economic price right here in the UK.

“Our failure to increase flights to BRIC countries alone will cost the UK as much as £31bn in lost trade in the period it takes to build a new runway.

“That’s just from a lack of flights to the BRIC countries – just the tip of the iceberg.

“In fact, in 15 years, if we still don’t have capacity up and running, the cost of lost trade to the BRICs will reach up to an additional £5.3bn a year. If we get to this point, we could be paying in excess of £600,000 an hour in lost trade.

“With timescales of 10-15 years to build new capacity, we shouldn’t have got this far down the line without a plan of action. That’s money down the drain - there’s nothing we can do about it now. But what we can do is avoid any future delays.”

The runway will help rebalance the economy Hall said. “Spare runway capacity isn’t an optional extra – it’s an economic necessity. It is the connective tissue that gives the UK the means to compete – securing the trade and investment which ultimately means growth and jobs.

“In a world of global supply chains, fast global delivery is crucial for British businesses of all sizes. Almost three in four businesses polled in the 2014 CBI/URS Infrastructure Survey said that the availability of direct flights made an impact on their travel decisions.”

“When it comes to airport capacity – time is money. We’re not just missing out on global opportunities, but paying an economic price right here in the UK" 

Connectivity is crucial in allowing British business to keep up with the global competition, she said. “Looking at the BRICs alone – we’re already out of the medals places. The UK has been relegated to 4th or 5th position for new routes to China, Brazil and Russia from the EU in the last 20 years.

“Meanwhile, our competitors are using their spare capacity to dip their toes in the water of new markets. While we’re all here discussing where and how to build a new runway, they are deciding which high-growth destination to fly to next.

 “We welcome the Prime Minister’s guarantee that he will deliver a decision this side of Christmas. He is right to – delaying into 2016 is too late.

“We need to get the legal process underway before the end of the year, and Parliament needs to get behind it. If it does that, we could see spades in the ground by 2020, with a new runway online between 2025 and 2030 and the whole country reaping the benefits by 2040.”

 

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