40. Weekly Newsletter
The UK’s high speed railway line between Manchester and London with branches to Birmingham and the East Midlands has suffered a major blow it its development with massive cuts set to take place in the coming weeks. HS2 was officially launched in 2009 and was projected to be the UK’s biggest infrastructure project, expected to completely transform public transport between London and the North and bridge the gap between them. UK prime minister, Rishi Sunak, faced significant protest this week as he plans to axe the northern leg of HS2 from Birmingham to Manchester. This is a major blow to the development of the economy in northern England with Conservative mayor for the West Midlands describing it as “cancelling the future” and “undermining investor confidence in Britain”.
This setback is a result of the spiralling cost that has continued to rise significantly since it was first planned in 2009 when the initial plan was for it to be a £37.5 billion investment. Now, most estimates project that it will be around £180 billion and so huge cuts are required in order to make the project feasible. Therefore, it seems that it will be the northern phase of HS2 that will be cut off in order to save an estimated £34 billion. However, this cost saving method is a huge blow to investors in the northern regions such as in Birmingham or in Manchester who were dependent on the economic growth as a result of the northern phase of HS2. For example, new owners of Birmingham City football club wrote to Rishi Sunak to warn him that cutting off the northern phase of HS2 would hurt Birmingham’s economy and damage investors’ confidence. The project for new owners of the club was a major factor in their takeover as fast and easy connections to Birmingham gave confidence that their investment would flourish.
The UK’s front page news cycle over the last seven days covered a wide range of topics with no single issue dominating the headlines. New Brexit border checks set to become very costly for businesses, UK retail inflation falls to lowest level in a year and house price falls across all regions in UK for the first time since 2009. Some of the newspaper front pages from this week were:
- Financial Times- UK retail inflation falls to lowest level in a year
- Financial Times- House price falls across all UK regions for first time since 2009
- The Guardian- Gillian Keegan plans to ban mobile phones in English schools
- The Guardian- Sunak fails to hand WhatsApp messages from time as chancellor to Covid inquiry
- The Times- Jobs under threat at HS2 engineer Skanska
- The Times- Rising Oil price fuels inflation fears on FTSE
BAE Systems lucrative contract
Britain’s largest defence contractor, BAE Systems, won a £3.95 billion contract to build a new phase of attack submarines. This comes after a move in September 2021 for the UK, Australia, and the US(AUKUS) to form a trilateral security pact to bolster the Indo-Pacific region. This contract will help supply Australia with nuclear powered submarines to counter any strong positions by China in that region. AUKUS is seen by UK officials and ministers as a key part of the important ‘levelling up’ scheme in the UK in which spatial economic disparities are reduced. Grant Shapps, defence minister, stated that “by backing British businesses to develop them, we’re taking long term decisions we need to boost our defence industry and to grow our economy”. Economic growth in the defence industry is crucial in maintaining the goals for the levelling up scheme as it provides a major boost to the North of England in places such as Cumbria.