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What Traffic Congestion Tells Us About Post-Brexit Britain

13/07/2017 13:23

Like many, many people, I took the family on a trip to the South Coast last weekend. And it was nice trip too, except for the trip part. From my home in a small Suffolk village to Bournemouth it's about a 4 hour drive, except it wasn't, predictably. Heavy traffic, speed restrictions, accidents, all in all it took about five-and-half hours down on Saturday morning and about six on the way back on Sunday evening. It gives you time to think, that sort of mind-numbing congestion, and in my case, it illustrated the gap between policy decisions, economics and the grinding, sweaty reality of what those two things can turn into.

Here's the problem: Congestion is a very complex thing to study in terms of its relationship with the economy. Heavy traffic can be an indicator of a thriving economy, because it means commuters and lorries, which in turn reflects jobs and trade. A US study suggested an average 4-5 minute delay on every commuter trip was a good sign for economic growth. That's why congestion is usually found around cities, which are economic powerhouses in the modern world. But there's a catch. Once you get up to regular 10+ minute delays, you've got economic problems. And regular 60 minute delays are a disaster. Too much congestion limits economic growth, and in extreme cases (like super-gridlocked Cairo, for example) costs the economy vast amounts of cash, in Cairo's case, it's reckoned to cost Egypt about 5% of its GDP. Ouch.

The economic twists and turns of congestion don't end there, either. The public works governments undertake to tackle congestion often cause short term economic booms. Major road projects represent an injection of cash into the economy and create jobs, plus they deliver benefits to local economies that enjoy more economic activity as a result of improved transport links. However, these effects don't always last. The M25 boosted the London economy. Outlying, mostly residential regions became connected around the orbital ring, house prices rose and inner-city workplaces relocated to the new M25 economic zone. Great, except for the local high street shops who lost trade to out-of-town shopping centres, or the local NHS services who now handle increased rates of pollution-related illnesses, or the local residents paying more council tax, or the councils faced with housing shortages (and so on). Then heavy traffic diminished the benefits of the boom, and the overall effect was an economic slowdown until roadworks improved the congestion. But road improvements didn't drive another boom, just restored the status quo. Projects like the M25 are, economically speaking, a cycle of diminishing returns.

Similarly, the hour-and-a-half delay on my trip to Bournemouth hit the local economy, because we were forced to grab a sandwich at the motorway service station as opposed to arrive in time to sit down and eat a proper meal in a local restaurant. The same applied on the way back, we left early because of the roadworks, and skipped a sit-down dinner for a motorway service burger. That might seem minor, but multiplied across millions of journeys that's a massive dent in UK consumer spending. Sure, we spent marginally more on fuel, but the revenue and tax take from that doesn't offset the loss of two meals to a local tourist economy. Consumer spending is the engine of real world economic growth, not tax or oil company profits which are reduced by the cost of undoing public health and environmental harm, rather than creating service-sector jobs or boosting manufacturing.

If the relationship between traffic congestion and economic growth is so complex, this raises an interesting point about Brexit. You might set out with an idea that is designed to boost the economy, but in practice, that idea can turn into something that chokes it. If that scenario applies to something as relatively simple as a road, imagine how much more complexity applies to dismantling our 40-year relationship with Europe.

Ironically, as a large percentage of UK commercial traffic is inbound-outbound EU lorries, if the economy takes a hit after Brexit, congestion should ease because fewer jobs and less trade mean less traffic. That's not good news. Or if there's a massive boom in trade, that might mean more congestion, which will choke economic growth and demand large public spending on new roads to address the issue. Maybe we'll get more roads, which drive another short term M25-style boom followed by another slump into gridlocked economic growth, then more roadworks to ease the economic slowdown and so on. Back to square one.

In that respect, Brexit is a bit like my evening last Sunday, pulling off the M3 onto the M25 and seeing the sign that says "Long delays ahead" anticlockwise, and "Congestion after junction" flashing on the clockwise side. As with all things economic, Brexit was never going to be an easy journey, but the idea that things will get better over time is as daft as thinking a new motorway will permanently ease congestion and boost economic growth. Sadly, in the real world, things are never that simple.

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