The Untold Truth: Unveiling the Harsh Realities of Britain's High-Speed Rail Crisis

The world witnessed the inauguration of the first passenger train in northern England in 1825. This marked the beginning of a revolutionary era for the country's economy, as it drastically reduced travel durations, expanded trade routes, and facilitated connections between major cities.

Fast-forwarding two centuries, the United Kingdom has recently scrapped its 15-year-long endeavor to establish a high-speed railway network linking London to the northern regions of the country.

That places the UK at a significant disadvantage when compared to the majority of the world's other advanced economies, many of which experience the advantages - both financial and environmental - of high-speed rail.

In London, England, on October 3, 2023, construction work on the Old Oak Common HS2 site continued as a train bound for Sheffield passed by. There has been intense speculation regarding the future of the HS2 high-speed rail project. Rumors have circulated that the government may abandon the Birmingham-to-Manchester leg and potentially change the planned endpoint from Euston to Old Oak Common, at least in its initial phase. The completion of the new station at Old Oak Common is expected to take place by the end of the decade. (Photo by Dan Kitwood/Getty Images)

Britain's credibility takes a hit as Prime Minister Rishi Sunak halts the HS2 rail project due to escalating costs. This decision only reinforces the painful truth that the country is unable to invest significantly in ambitious projects, unlike Germany, France, Italy, and even China or Japan.

I should disclose a personal interest: my great-great-grandfather served as one of the drivers on the Flying Scotsman, which was the fastest steam train in the world during its record-breaking journey from London to Edinburgh in 1928. As a result, I find myself feeling strangely disheartened by the decision to cancel the proposed high-speed rail line connecting Birmingham to Manchester (with the leg to Leeds already being scrapped).

While it is true that there will be some compensation for the northern towns and cities that will miss out on the employment opportunities that the ambitious construction project would have brought, as well as the potential economic investment that faster passenger and freight train travel would have enticed, Chancellor Sunak has announced that the £36 billion ($43.7 billion) in savings will now be redirected towards new transportation initiatives in the Midlands, the north of the UK, and other regions.

According to Henrietta Bailey, CEO of the Greater Birmingham Chambers of Commerce, the development of new projects and achieving a thriving economy should not have been viewed as mutually exclusive options. It is important to note that these new projects will require considerable time and effort to be fully realized, even before they can be implemented. Additionally, Bailey mentioned that some of the alternative options highlighted by Sunak relied on the successful completion of HS2.

In east London on March 31, 2023, a shopkeeper (L) hands over change to a customer in the form of GBP pound sterling notes, including ten and twenty pound bills. This photo, taken by Susannah Ireland, depicts the moment. (Photo by SUSANNAH IRELAND/AFP via Getty Images)

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The UK economy is bigger than we thought. It still has 'a growth problem'

Sunak's recent reversal on a strategic initiative, which he was previously committed to a year ago regarding HS2, has caused a rare alliance of business leaders, labor unions, and even some political allies (including former Conservative prime ministers) to come together in condemning the decision. They have expressed concerns about the potential loss of credibility with investors.

According to a statement from the High Speed Rail Group, which represents companies like Siemens, Hitachi, and Bombardier, this is the UK's most significant and damaging U-turn in the history of infrastructure. They highlight that every other major European country has successfully developed a high-speed rail network, recognizing its crucial role in modern societies and economies. They still hope that Britain can achieve the same.

British manufacturers are deeply saddened by the missed opportunity to generate income from the endeavor and potential future ventures. According to Stephen Phipson, the chief executive of Make UK, an organization representing manufacturing firms, the decision conveys a highly disheartening message regarding our dedication to successfully executing large-scale infrastructure projects within the UK.

Mark Allen, the CEO of Landsec, believes that the main problem is not about the specific economic benefits that HS2 will or will not bring. Instead, it reflects our country's capability, or lack thereof, to successfully complete major infrastructure projects.

Sunak has put in significant effort to rebuild the UK's reputation, which was heavily damaged last year when his predecessor, Liz Truss, caused a decline in the value of the pound and UK government bonds. Investors rejected her proposal for substantial tax cuts without proper funding.

Now he is facing the reality of the situation. The UK Treasury provided funding to support businesses and households during the pandemic and the energy crisis, overseen by Sunak as the finance minister. However, now the funds have run out.

Since the pandemic began in March 2020, the UK government debt has increased by 40%, reaching almost £2.6 trillion ($3.3 trillion), surpassing 100% of the national income for the first time since the early 1960s. Moreover, a significant portion of this debt is linked to inflation, causing repayments to rise along with the increase in prices last year.

The HM Treasury Building at the Corner of Parliament Square and Parliament Street in Whitehall, London, England. (Photo by: Steve Vidler/Prisma by Dukas/Universal Images Group via Getty Images)

Steve Vidler/Prisma by Dukas/Universal Images Group via Getty Images

Why inflation makes Britain's debt the costliest among rich economies

Britain allocates a higher proportion of government revenue to debt servicing compared to other developed economies, and the expenses for borrowing are rising once again. This week, the yield on 30-year government bonds, known as gilts, reached its highest point in two decades, surpassing even the figures observed during Truss's tenure. The UK finds itself ensnared in what its fiscal watchdog characterized earlier this year as "a highly precarious period for public finances."

As public services, ranging from healthcare to education, crumble due to a desperate need for additional funding and with an impending election on the horizon, Sunak made a significant decision by reducing costs using drastic measures rather than more precise and controlled methods.

Business leaders lack confidence.

James Mason, the CEO of the chamber of commerce for West and North Yorkshire, expressed disappointment as a decade's worth of promises, regarding infrastructure upgrades, were abruptly revoked. He emphasized that the current rail network, reminiscent of the Victorian era, is ill-equipped to handle the future surge in demand.

Hanna Ziady contributed to this article.