Heathrow third runway GDP yield may be 90% less than original estimate | Heathrow airport

Government analysis suggests the economic boost from a third runway at Heathrow could be a fraction of previous estimates, while the overall trade-off from the larger airport could set the UK back by as much as £62.5bn.

While ministers have vowed to accelerate the expansion of London airport in the name of economic growth, documents prepared by the Department for Transport state that the runway is expected to increase GDP by only up to 0.05%; This is 90% less than the previously mentioned 0.5%.

The figures, which one economist described as historically bad, have cast arguments for a third runway into doubt again. The DfT calculates that the net present value of the scheme, even if fully privately funded, is between -£23.4bn and -£62.5bn. Net present value is defined by the DfT as the overall social value of expanding Heathrow compared to not doing so, adding up all the costs and benefits.

This figure includes £29bn to £42.4bn of positive benefits to passengers, mainly from lower airfares, as well as wider economic benefits.

But the DfT assessment calculates that these gains are outweighed by the circuit’s social and environmental impact, which it estimates to be between £58bn and £82bn. Profits at airlines and other airports are expected to fall by around £25bn. evaluation.

Chancellor Rachel Reeves backed the rapid expansion of Heathrow in the name of economic growth, describing it as “the government’s top priority” as consultations on the next stage of the legislative process were launched on Thursday.

The documents state that “external analysis commissioned by the DfT found that the scheme could add up to 0.05% to GDP in 2056.”

The figures previously stated by the government were in the 0.43%-0.5% growth range.

Heathrow said the new figures did not reflect the full economic benefits, while a government spokesman said they were “only part of the picture”.

But Alex Chapman, head of economic policy at the New Economics Foundation think tank, said: “Desperate for a single per cent of GDP growth, this government has lost its way. They have said they support Heathrow expansion for economic reasons, but their own analysis shows it will not work.”

“The results of the ministry’s impact assessment must be among the worst in history and reflect what we said last year: the economic arguments for expansion do not make sense.”

A DfT spokesman said: “Net present value is only part of the overall picture; importantly, an expanded Heathrow could support more than 60,000 new local jobs and benefit the UK by £40 billion.

“This will attract international investment and strengthen Britain’s connectivity, and we have been clear that the expansion will be privately funded.”

Heathrow said the DfT assessment model excluded other ways in which expansion could improve the UK’s economic competitiveness and did not reflect the value of UK trade.

He noted that the Treasury had consistently found that a larger airport would grow the economy and benefit the UK, and this was supported by unions, regional airports and businesses.

The documents were released as the government announced the next stage of fast-track approval of the third runway, with consultations ahead of MPs’ vote and ministers vowing to have it on site by 2029.

Heathrow’s proposed 3,500-metre runway would divert the M25 motorway and destroy around 800 homes, adding around 276,000 extra flights a year. The scheme is estimated to cost £33bn, but a recent independent assessment for the Civil Aviation Authority said the project was likely to cost between £32.7bn and £52.4bn.

The DfT’s health impact assessment also showed that the third runway could significantly harm the health and wellbeing of up to 3 million people living near Heathrow. The official report said Heathrow expansion would also worsen access to housing, education, health, open space and transport, as well as impacting water quality and community cohesion.

Liberal Democrat transport spokesman Olly Glover said: “Labour cannot demonstrate how the Heathrow expansion complies with our climate commitments or that it can be delivered anywhere close to legal noise and air pollution limits.

“True leadership delivers economic progress without undermining our climate commitments or crushing communities in the flight path.”