Economic Recovery
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How will the current economic crisis affect the rail industry business environment? How will the downturn affect the modal share between road and rail transport? What kind of challenges will the rail industry have to face in the coming months? These are the key question that UNIFE has been addressing since the beginning of the global economic crisis.
The rail industry is expected to be less affected by the crisis than other industries. Indeed, given the rather long business cycles which feature the rail supply industry (from project inception to cash out), the impact will depend on the duration and extent of the current economic downturn. Should it last for a longer period of time, then the impact is likely to be more significant.
Rail investments rely heavily on state budgets, i.e. infrastructure investments, signaling equipments, rolling stocks’ purchases by national rail operators and public transport authorities. Therefore, in the long-run, a risk of empty pocket is not to be neglected if budgets are adjusted through changed growth expectations and budget constraints.
With the turmoil on the capital markets, private financing has also become more difficult to access. Temporary higher risk aversion as well as reduced bank funds and appetite for cross border financing are certainly a threat for rail investments especially for on-going and future public-private partnerships projects (PPPs).
However, the strong megatrends, e.g. demographics / urbanization / infrastructure congestion/ fuel prices and the need for greening transport will drive growth in the long-term and outweigh negative short-run effects.
For more information, please contact:
Virginie Poirier
Economics Advisor
+32 2 642 23 29
UNIFE Links
To access UNIFE's position paper on Community Guidelines on State aid for railway undertakings (12.01.2008) please click here
To access UNIFE's position paper on the 2008/2009 budget review (21.04.2008) please click here
To access UNIFE's news release "EU leaders miss opportunity to boost sustainable transport" (23.03.2009) please click here
External Links
To access the EC draft community guidelines please click here
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