Long-term infrastructure investments lie at the heart of Westminster’s latest plan to boost the nation’s economy. In the foreword to the government’s Build Back Better policy document, Boris Johnson writes: “We will redress Britain’s historic underinvestment in infrastructure, with £600bn of gross public-sector investment over the next five years, so our United Kingdom becomes a truly connected kingdom.”
Infrastructure projects aren’t simply about building roads, bridges, ports and airports. They also deliver public institutions such as schools and hospitals. Social housing is also being targeted for investment. This is one of the main reasons why the government has been engaging with other big investors, such as pension funds, insurance companies and local authorities.
Investment is all about risk and reward. The bigger the risk you take, the more you should expect to receive in return. Infrastructure investments tend to tie up capital for longer periods. The so-called illiquidity premium they pay to compensate for this is what makes them attractive to investors.