A think tank has warned of the damage to the UK economy if the government fails to act quickly on the looming choice between runway expansion at London’s Heathrow or Gatwick airports.
An Independent Transport Commission (ITC) report sets out the macro-economic consequences - including foregone significant productivity and inward investment benefits - if Westminster does not act quickly upon the Airports Commission's forthcoming recommendations.
The ITC report: "Time to act: the economic consequences of failing to expand airport capacity", comes as the aviation industry awaits the conclusions of the Airports Commission - led by Sir Howard Davies - on the UK's future airport capacity plans.
The options include a third runway at Heathrow, lengthening an existing runway at Heathrow, or a second runway at Gatwick to the south east of London.
The ITC commissioned former Bank of England economist, Dr Rebecca Driver of Analytically Driven, to produce research analysis exploring why better air connectivity matters so much to the UK economy.
The ITC, as a neutral observer, makes it clear that the report does not comment on where expansion should take place but looks at the consequences of doing nothing for the UK economy.
Once the commission makes its recommendations, ITC stated: “The challenge then falls to government to balance local worries with the broader national needs of the UK – including jobs, trade, investment and productivity – to make a clear decision, and act.”
In its headline findings the ITC says that there are “big gains for cargo and freight - a direct flight between two international cities on average compensates for about 10% of the negative effects on trade associated with the typical international border.
“Transport costs are by far the highest aspect of the costs of goods crossing an international border.”
It added: “Failure to improve air connectivity will hamper the government's objective of improving UK productivity (a key part of next month's Budget), since the most productive companies and businesses are also those that trade and benefit the most from international connections.
“High value sectors need improved connectivity - exporters and those involved with international trade have contributed 60% of UK productivity growth in recent years. Failure to provide sufficient direct air connectivity to new markets is therefore likely to act as a brake on these sectors.”
ITC Commissioner Dr Stephen Hickey said: "The conclusions of our analysis are clear: further indecision, or worse still, no decision in favour of increasing airport capacity in the south east by the government will lead to a loss of foreign direct investment, harm the chances of a more balanced export-led recovery and act as a drag on the key area of productivity.
"As a medium-size nation operating in a highly competitive global marketplace, can Britain afford to choose a path that impedes economic progress for generations?"
