25 Nov 2020
HS2: What have we done so far?
Britain’s COVID-hit construction industry has received a major boost as the government continues to invest in its flagship rail project, High-Speed 2 (HS2).
Work on the project was suspended in March over COVID fears but was formally approved to restart on 15 April with contractors following social distancing guidelines.
HS2 signed a contract with Swedish construction giant Skanska AB for the design and building of the first phase of the project, allowing HS2 to book £1.12bn worth of European orders for Q2 2020, and creating a projected 6,000 jobs during the construction of Phase 1, which is expected to be complete in 2026.
At the same time, Align, a three-way joint venture between Sir Robert McAlpine, Bouygues and VolkerFitzpatrick, received the all-clear to start work on HS2’s £1.6bn C1 route, a 21.6km high-speed line including a 3.37km viaduct crossing the Colne Valley and a 16km twin-bored tunnel.
These decisions came despite a dismal year for Britain’s economy, with the government predicting that the economy could suffer a 13% contraction in 2020, and the fastest increase in borrowing since WWII leaving us with the biggest deficit since the 2008 recession.
Once the pandemic is over and economic recovery begins, the government will probably take austerity measures, including spending cuts, putting its “levelling up” strategy at risk. The construction sector would expect to see projects and growth seriously curtailed in that scenario.
GlobalData predicts a 5.8% contraction in the British construction sector in 2020 (still better than predictions for the economy as a whole) thanks to ongoing COVID-related disruptions in construction works. Before the pandemic, the sector was expected to enjoy a slight acceleration in growth this year.
Although the progress made on HS2 is a significant light on the horizon, further lockdown measures are likely to have additional impacts on growth.