Contractor also warns Brexit could delay HS2 and Hinkley Point C

Balfour Beatty has warned funding for Crossrail 2 and upgrades to the London Underground could be under threat when the UK leaves the EU.

In its new report 鈥� Infrastructure 2050 鈥� published today, the contractor said the UK is the largest shareholder in the European Investment Bank (EIB) but will have to give up its stake when it leaves the EU, meaning it will lose 鈥渂illions of pounds in infrastructure funding.鈥�

Balfour said this loss of EIB funds will hit 鈥渟ome of the larger infrastructure projects such as Crossrail 2 and London Underground upgrades鈥�, adding: 鈥淚t is unlikely that HM Treasury will be directly able to make up the amount in the short to medium term.鈥�

The EIB has invested 拢16bn in UK projects over the last three years, Balfour said, including in the extension of the M8 motorway between Edinburgh and Glasgow and a 拢700m loan to the Thames Tideway Tunnel.

The contractor also warned Brexit could make the skills shortages worse and potentially delay projects, with the issue 鈥減articularly relevant鈥� for HS2 and nuclear new builds such as Hinkley Point C.

The firm said given the number of major infrastructure projects in the pipeline 鈥渦ncertainty around the free movement of labour鈥� could cause difficulties in getting enough staff and 鈥渕ay increase costs where demand for labour outstrips supply, with the subsequent risk of project delays.鈥�

Balfour also called on the government to come up with a timetable for the UK鈥檚 exit from the EU in order to protect private infrastructure investment, and has recommended the government produce 鈥渆arly answers to the many practical questions about doing business during and after Brexit鈥�.

The firm said the political and policy landscape needs to be stable enough to attract private investors to help fund infrastructure projects who, it added, finance 69% - worth 拢260bn 鈥� of all the UK鈥檚 planned infrastructure investment.

Balfour warned that while the UK negotiates its exit from the EU, private infrastructure investment 鈥渕ay slow鈥� with some investors 鈥渓ikely to postpone decisions to make investments until the UK-EU relationship is renegotiated.鈥�

The contractor also called on the government to borrow more to fund infrastructure improvements and to come up with long-term visions and strategies for the aviation, rail and energy sectors.

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