1 year ago
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Key events
Introduction: UK’s flagship rail project HS2 may not run to central London
Good morning, and welcome to our rolling coverage of business, the financial markets and the world economy.
The UK government has refused to confirm that its flagship rail project HS2 (High Speed 2) will reach central London following reports.
The Sun reported that because of rising construction prices, the high speed rail project may not run to Euston until 2038 – or the terminus may be scrapped completely, with trains instead stopping at a new hub at Old Oak Common to the west of London, about 8km (five miles) away.
Commuters would have to use the new Elizabeth line to get into central London.
A Department for Transport spokesman said:
The government remains committed to delivering HS2 to Manchester, as confirmed in the autumn statement.
As well as supporting tens of thousands of jobs, the project will connect regions across the UK, improve capacity on our railways and provide a greener option of travel.
The Sun also reported that a two-to-five-year delay to the entire HS2 project is being considered, with fresh fears that the Birmingham to Crewe and Manchester legs could also be scrapped. HS2 was intended to connect London with Birmingham, Manchester and Leeds, but the leg to Leeds has been scrapped.
Work on the first phase of the project, between London and Birmingham, is well under way and that part is scheduled to open by 2033.
The project has been dogged by criticism over its cost and environmental impact.
In October, the levelling up secretary Michael Gove suggested capital investment for HS2 would be reviewed, but chancellor Jeremy Hunt subsequently backed the project.
The target cost of phase one between London and Birmingham was £40.3bn at 2019 prices, but the Sun said that first phase alone could cost £60bn. A budget of £55.7bn for the whole HS2 project was set in 2015.
US stocks rallied yesterday after better-than-expected economic data, with the Nasdaq gaining 2% and the S&P 500 up 1.1%. Asian shares have hit near-nine-month highs as recession fears faded, in their fifth week of gains. MSCI’s broadest index of Asia Pacific shares outside Japan rose 1.14% to 559.01.
Investors were encouraged by news yesterday that the US economy grew faster than expected in the fourth quarter, although it could be the last quarter of solid GDP growth before the effects of the Federal Reserve’s rate hikes are fully felt. Some economists still expect a “mild recession” in the coming months.
The Fed is expected to raise rates by 25 basis points to 4.75% next Wednesday, which would be a smaller hike than previous moves. Markets see the Fed’s main rate at 4.45% next December lower than the 5.1% Fed officials have projected into next year. Today, data on US personal consumption expenditure (PCE) could provide further clues on inflation.
In Japan, core consumer prices in Tokyo, a leading indicator of national trends, rose 4.3% in January. from a year earlier, marking the fastest annual rate in nearly 42 years. If replicated nationwide, this could force the Bank of Japan to abandon its ultra-easy monetary policy.
The Agenda
8am GMT: Spain GDP for fourth quarter flash (forecast: 0.1%)
10.30am GMT: European Central Bank president Christine Lagarde speaks
1.30pm GMT: US Core PCE Price index for December (forecast: 4.4%, previous: 4.7%)
3pm GMT: US Michigan consumer sentiment for January (forecast: 64.6)
English (US)