There are a couple of issues here.
First, the UK’s economic data has not rolled over as predictably as economists had originally suggested and, second, the UK already has a massive amount of debt. Further borrowing might make sense to some but it will not be without opposition from both the public and the more fiscally conservative members of the government.
Hot on the heels of the Brexit boost comes the potential impetus from the unexpected election of Donald Trump. Nobody really knows what ‘Trumponomics’ means for the US, or the world at large, but he has said not only that he will be “putting America first” but also that “my contract calls for $1trn in infrastructure investment, of which the inner cities will be a major beneficiary”.
Another point to consider is currency: the fall of sterling makes the entry point look increasingly appealing to foreign investors, which could benefit British infrastructure products.
It is hardly surprising therefore that, for many British investors, infrastructure looks like a promising asset class, especially when both bonds and equities remain relatively expensive.
This remains the case, even when considering the recent push upwards in yields and a stutter from those fixed-income proxy equity darlings, such as consumer staples.
Property in all its various guises still does not look particularly good value either, especially after the recent rise in global bond yields. Whether this is bubble territory or not, the sector looks vulnerable to further falls.
