UK Public Private Partnerships and the Credit Crunch: A Case of Risk Contagion?

S. Bailey, D. Asenova, Matthias Beck

Research output: Chapter in Book/Report/Conference proceedingChapter (peer-reviewed)peer-review


During the past twenty years, the UK has relied heavily on Public Private Partnerships (PPP) and especially the Private Finance Initiative in the procurement of infrastructure and services. Discussing the causes of the credit crunch and its effects on PPP, this paper notes that the provision of new public sector infrastructure and related services has been adversely affected by the impact of the credit crunch on Private Finance Initiatives (PFIs). These problems have arisen primarily from the unwillingness of commercial banks to replace collapsed PFI bond financing unless new PFI contracts reduce financial risks; which, in turn, is likely to increase the cost of these projects to the public sector. Additional financial strains have arisen for the UK government from the need to bail out collapsed PFI projects. Overall we find evidence that the UK commitment to PFI has not only increased immediate fiscal pressures on the UK when these have become least palatable, but has also created fiscal vulnerabilities at local and national levels which are likely to hamper the country’s ability to launch counter-cyclical responses to the ongoing crisis.
Original languageEnglish
Title of host publicationUnderstanding Risk
Subtitle of host publicationContributions from the Journal of Risk and Governance
Place of PublicationNew York
PublisherNova Science Publishers
ISBN (Print)978-1-62618-686-6
Publication statusPublished - 2013

Bibliographical note

This is an updated and revised version of an article originally published in the Journal of Risk and Goverance


  • Risk management
  • Financial risk
  • Risk
  • Corporate governance


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