Breaking the second leg of HS2, release of UK GDP figures on Friday, and Financial Times suggest US are sending long-range missiles to Ukraine.
Headlines speculating on the Government’s next HS2 announcement are continuing to circulate, with many suggesting that Sunak may scrap the high-speed project north of Birmingham. With former and current politicians from across the political spectrum all giving their two cents, the BBC are reporting that such an announcement from Downing Street may be made as early as this week. Earlier this month a leaked document suggested that though £2.3bn had already been spent on stage two of HS2 between Birmingham and Manchester, £35bn could be saved by axing the phase all together. This comes amid reports that the costs of the project are continuing to mount. For example, in 2010 the estimated cost of the whole project totalled some £30bn. By 2016, this had inflated to £80bn before being further revised higher to a gargantuan £107bn by 2020.
Over the weekend, the deputy chairman of the Oakervee report (which aims to investigate the future of HS2) argued to The Telegraph that Sunak “needs to be bold and call a stop to the line north of Birmingham”. Here, Lord Berkeley continued by saying that “If the line stops at Old Oak Common, then the money saved could be used to improve rail services in the North.” The Defence Secretary and former Transport Secretary Grant Shapps also said over the weekend that the Government would be “crazy” if it didn’t review the cost-spiralling project. This comes
as the Chancellor Jeremy Hunt conceded that spiralling costs were becoming “totally out of control”. According to The Telegraph, the cost per mile of track has skyrocketed to over £275m for HS2’s phase one. To give this some perspective, the cost per mile of track on the Berlin to Munich line is around £30m, while the Madrid-León line is around £25m.
Elsewhere however, the former Chancellor George Osbourne said that abandoning the line North of Birmingham would be “an act of huge economic self-harm”, as would scrapping the section of the line from Euston to Old Oak Common. Andy Burnham also expressed concern that the leg to Manchester could face the axe with the Greater Manchester mayor saying that it ‘beggared belief.
As speculation mounts, the BBC is stating that over 80 companies and business leaders have sought clarity over the government’s plans regarding to HS2. For example, Virgin Money, Manchester Airports Group, British Land, and the Northern Powerhouse have all signed off a formal letter urging Downing Street for renewed commitment to HS2.
As such, all eyes are now on any clarification from the Government as speculation over HS2 mounts ahead of the Conservatives annual conference in Manchester.
Friday morning will see the latest release of UK GDP figures for Q2, where the general market consensus is projecting a print of 0.4% on an annualised basis. This follows the last reading which indicated that the UK economy expanded 0.2% on a quarter-on-quarter basis over Q2 – a slight increase from Q1’s figure of 0.1%. Behind Q2’s previous figures, construction rose 0.3% as household consumption and government consumption rose 0.7% and 3.1%, respectively. Exports meanwhile slumped 2.5% as industries including the UK’s petroleum and natural gas extraction industry seeing a drop in value as government investment also fell 6.7%.
Last month, the Bank of England’s monetary policy report noted that while they are no longer forecasting a recession, output will continue to remain sluggish over the next two years. While these projections a more upbeat than the BoE’s assessment last year (which pointed to eight consecutive quarters of economic contraction (starting in Q4 2022), UK growth is far from out of the woods, particularly with monetary conditions being at their tightest levels since 2008. Indeed, according to the Times, citing the KPMG Quarterly Survey, annual growth is expected to fall from 0.4% to 0.3%.
According to the FT, President Joe Biden has agreed to send Army Tactical Missile System (ATACMS) to Ukraine following months of consideration. While the news has not been announced publicly by the Biden Administration, Ukraine has long requested these ATACMS, which have a range of up to 300km and can be fired from Himars launchers. The decision follows one US national security adviser stating that the US was in constant conversation to Kyiv and its allies about the provision of munitions while also “ensuring that [the US] are able to provide for our own deterrence and defence needs”. Ukraine’s cache of 155mm artillery rounds have reportedly been running low, with the US trying to alleviate this by sending 155mm cluster munitions, a subject of controversy.
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