Global infrastructure spending is set to reach $35 trillion over the next 20 years. Will it be enough to stimulate Europe’s economic regeneration?

A new study by CIBC World Markets estimates that governments worldwide will spend as much as $1.5 trillion annually for the next 20 years on infrastructure improvements to make up for a lack of such spending in previous decades.

Economist Benjamin Tal, who authored the study, believes countries will spend approximately $30 trillion over the next two decades on new roads and similar projects and to fix existing infrastructure. “The global economy is running a major infrastructure deficit as the cost of decades of under-investment is now surfacing,” he says in the report.

The United States will spend $150 billion annually for the next 10 years while Asia will look to invest $400 billion a year on roads, bridges and power plants, among other public assets. China alone will be spending $200 billion on infrastructure annually.

Europe could certainly do with an infrastructure funding boost, too: for instance, the International Energy Agency estimates it will cost the EU at least $650 billion to upgrade its power grid. And Tal points out that in terms of creating jobs and stimulating activity, infrastructure spending is a much more effective tool than tax cuts.

However, many European economies have put tax cuts at the centre of their economic stimulus plans, with some giving only a cursory nod to spending on public works.

Does Europe need to invest more in infrastructure development to help boost its flagging economies?