Ducking and diving on infrastructure won’t drag us into the 21st century

There are measures of how broke the UK has become wherever you look. And it’s not just the public sector that is showing the strain.

The vast sums needed to keep up with 21st century developments are also absent from a private sector that has become reluctant to take any big bets without a large slug of government support behind it.

Bank of England governor Mark Carney told a House of Lords committee last week that companies were sitting on heaps of cash and when Brexit uncertainty was lifted, would begin to spend it.

This spree, he implied, would bring about an upgrade of factory equipment, service sector processes and infrastructure such that Britain’s pre-2008 productivity growth would resume.

His comments came with heavy caveats. And Threadneedle Street still predicts a loss of GDP growth against a forecast that has Britain staying inside the European Union.

Nonetheless, the message was clear. No one should despair about quitting the EU; an investment boom that consigns the standstill of the last 10 years to history is still possible.

However, the evidence for this assertion is alarmingly thin. Most companies with spare cash have preferred to milk their customers, sweat their assets and pass on the proceeds to investors through share buybacks and dividends.

That’s not just a UK trend. It can be seen in the US, where large corporations are trumpeting how much of Donald Trump’s tax cuts are being spent on wage rises and investment, although these sums are likely to be dwarfed by the amounts passed back to shareholders.

Even so, that still provides significant sums of money for investment by the tech giants and a manufacturing sector that has long embraced innovation to compete on the world stage. Just as importantly, US universities provide a backbone of research for the private sector to feed on, and the US government, however distasteful it may be, subsidises the arms and aerospace industries to make them world-beaters.

In the UK, a large number of corporations are struggling. That’s not to say they are unprofitable. It’s just that they are in sectors where it’s difficult to make enough money to feel secure about future investment. And that brings us back to the public sector.

Seven years of austerity have diminished the Ministry of Defence to a point where BAE Systems ( formerly British Aerospace) must look elsewhere for contracts.

The Carillion debacle has shown there is little money to be made in the public sector by highly indebted outsourcing contractors. Rival Capita has already signalled a steep fall in profits. Other big private contractors like Balfour Beatty, Kier, Mitie, Serco and Interserve have all faced problems and not all are yet secure.

Car industry suppliers such as GKN are the subject of takeover bids. Major retailers have seen their sales battered by a mix of weak consumer demand and the monopolistic tactics of Amazon as it dominates sales on the web.

What’s left? The oil firms BP and Shell have been selling bits of themselves and relying on the climbing oil price for profits.

BT, arguably at the fulcrum of Britain’s digital future, is hampered by the black hole in its pension fund from pumping billions into higher-grade fibre-optic cables.

Britain’s universities have provided a bright spot during the austerity years. But they have relied on foreign students paying through the nose and domestic students paying with government-sanctioned borrowing. Foreign students are becoming harder to find and domestic fees need to rise at the very moment that public sentiment has turned against having them at all. Vice-chancellors report a squeeze on their budgets that prevents them taking part in Britain’s recovery.

The UK is expert at boxing clever to give a show of modernity without spending vast sums of money. Compare its infrastructure with Spain’s, which has undergone a revolution in the last 20 years at enormous cost.

Madrid has put in place one of the world’s largest high-speed rail networks, more international airports than any other European country and an ultra-fast broadband network of fibre-optic cables that reaches 31 million premises – more than France, Germany, the UK and Italy combined.

The UK has pushed its rail system to the limit with better diesel trains and incremental track improvements. BT has delivered enough broadband capacity through the copper network to satisfy the demand for on-demand TV and gaming. And the answer to a lack of airport capacity is not regional international airports, most of which Madrid has mothballed.

Ducking and diving is the UK’s destiny until austerity ends in the middle of the next decade. The hope must be that the country doesn’t look too broke when that time comes.