A new survey conducted by the Railway Industry Association (RIA) has found that over half of rail suppliers believe the industry will contract in the next year. This represents a significant increase in negative sentiment among businesses across the sector, and is the highest negative rating recorded in the last five years.
The survey, which polled 200 railway supplier leaders, also found that only 24% think the rail supply industry will grow in the coming year, and that 48% think their own business will grow. This is the lowest cohort predicting growth since the survey was first conducted in 2019, and worse than during the Covid-19 pandemic.
The survey also found that 83% of rail businesses believe there is likely to be a hiatus in rail work over the next year, with the main reasons cited being a delay in GBR-related rail reform and uncertainty over the completion of major projects.
In response to this, the three main measures that rail businesses say they will take are:
- Freezing/slowing recruitment (44%, up from 26% in 2022)
- Prioritising work outside the UK (42%)
- Pausing or slowing plans to expand in the UK (35%)
Only 13% of rail businesses believe that the Government will achieve its rail decarbonisation targets of removing all diesel-only trains from the network by 2040 and achieving a fully Net Zero railway by 2050.
Commenting on the survey findings, Darren Caplan, chief executive of the Railway Industry Association, said: "The survey's conclusions are deeply concerning. They show rail business leaders in the UK anticipating a contraction in the rail market, at a time when Unife, the European trade association, is predicting 3% rail market growth every year around the world."
Caplan also said that the findings show the lowest levels of confidence among senior leaders on the growth outlook for their businesses over the next five years since 2019. Over 80% forecast a hiatus in work in the year ahead, as the Government has still not set out clear steps on rail reform or firm commitments and timescales for delivering major projects.
James Rentoul, Senior Director at Savanta, which conducted the survey, said: "These results reflect the tumultuous year the rail sector has had, in light of both numerous rail strikes and the recent news of the scaling-back of HS2.
“Confidence in the rail supply sector saw a hit last year in 2022, with an increase in the proportion of firms expecting the sector to contract, and confidence has suffered a further dampening this year."
Rentoul also said that more than half of rail decision-makers now expect the sector to contract.
“More than half of rail decision-makers now expect the sector to contract. On top of this, many firms appear to lack confidence in the Government’s plans for the sector, with four fifths of firms thinking a hiatus in rail work over the next year is likely.”, he added.
The RIA has called on the Government to set out a clear roadmap for rail investment, whether involving the new Network North schemes, projects from the Rail Network Enhancements Pipeline, the Integrated Rail Plan for the North & Midlands, and a plan for the mix of new and refurbished trains it wants to see in the years ahead, which it believes will provide some clarity and certainty for the industry.
Photo Credit: iStock