Published by Global Banking & Finance Review®
Posted on January 28, 2025
4 min readLast updated: January 27, 2026
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The UK considers a third runway at Heathrow to boost the economy, facing environmental and legal challenges, with costs over 20 billion pounds.
LONDON (Reuters) - British finance minister Rachel Reeves is expected to back the expansion of Heathrow Airport on Wednesday, turning to the country's most controversial infrastructure project in her hunt for economic growth.
But even with her support, the plan for a third runway at Heathrow, one of the world's busiest airports, has numerous hurdles to overcome even before construction can start.
WHY IS THE UK CONSIDERING A THIRD HEATHROW RUNWAY NOW?
Reeves wants to breathe life into a stagnant economy and has said infrastructure projects will help drive growth by luring investment, and in Heathrow's case, boosting trade and tourism.
The Labour government, elected in July, is under increasing pressure after Britain's economy flatlined during its first six months in charge.
Meanwhile, Heathrow Airport operates at 99% capacity and risks being overtaken in Europe, where it is the busiest airport. Its two runways compare with four each in Paris' Charles de Gaulle and Frankfurt Airport, and six at Amsterdam's Schiphol.
WHAT IS THE HISTORY OF THE HEATHROW EXPANSION PLAN?
Heathrow's third runway was given the green light in 2009 before being scrapped by a new government in 2010. That sparked ideas about building a new hub airport east of London, before a commission recommended a new runway at Heathrow in 2015.
In 2020, Britain's top court overturned a previous ruling blocking expansion on environmental grounds, giving the third runway the green light. But that came during the COVID-19 pandemic, which brought air traffic to a standstill.
Heathrow then focused on travel recovery. In 2024, passenger numbers jumped to 84 million, overtaking a pre-pandemic high and pushing the third runway back onto the agenda.
WHAT ARE THE ENVIRONMENTAL OBJECTIONS TO THE EXPANSION?
Heathrow is just 15 miles (24 km) west of London. Residents have for decades complained about noise pollution, safety risks from flights over the densely populated city, and more recently, about the impact of soaring carbon emissions.
The 2020 ruling against expansion, overturned later that year, referenced a failure to take into account the government's commitments on climate change.
Increasing use of sustainable aviation fuel will help cut carbon emissions from flying, helping to boost Heathrow's case.
Still, the expansion plan could face a legal challenge in the shape of a judicial review of a government decision in favour of the new runway.
Working in Heathrow's favour is the government's promise to overhaul planning rules to make it easier to build, including potentially streamlining the judicial review process on Nationally Significant Infrastructure Projects like Heathrow.
HOW MUCH WOULD THE PLAN COST?
Building a new runway was estimated to cost 14 billion pounds ten years ago, but inflation since then may put the final bill in excess of 20 billion pounds.
WHAT ARE THE FUTURE CHALLENGES?
Other challenges abound. The complex project would involve re-routing London's orbital motorway through a tunnel, at a time when the number of construction workers in the UK is falling and as the government pushes other big projects, like a plan to build over a million new homes.
The right balance of incentives is also needed. Investors will want a long-term settlement in place to ensure fair returns, while airlines will want to avoid being saddled with lofty future costs.
Last year, Heathrow's ownership changed when French private equity group Ardian and Saudi Arabia's sovereign wealth fund bought stakes in the hub.
Ardian, now Heathrow's biggest shareholder with a 23% stake, told the Financial Times in November that it would support management if it wanted to build a new runway.
Reeves's expected support puts the ball in Heathrow's court to submit a planning application.
Heathrow's most recent statement on the third runway is that it is considering options "in line with strict tests on carbon, noise and air quality."
(Reporting by Sarah Young; Editing by Bernadette Baum)
The UK is considering a third runway at Heathrow to stimulate a stagnant economy by driving growth through infrastructure projects, which could attract investment and boost trade and tourism.
The cost of building a new runway was estimated at 14 billion pounds a decade ago, but inflation may push the final bill to over 20 billion pounds.
Residents have raised concerns about noise pollution, safety risks from flights over densely populated areas, and the failure to account for the government's climate change commitments.
The expansion plan could face a judicial review of the government's decision to support the new runway, which may complicate the approval process.
Increasing the use of sustainable aviation fuel is expected to help reduce carbon emissions from flying, which could strengthen the case for Heathrow's expansion.
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