Among the impacts of worsening congestion are lower wages, investment and household consumption and higher inflation. The cause, according to the report, is too many cars and the solution lies in better pricing of public versus private transport:
If these predictions are to be avoided, a big shift in public attitudes on at least two issues is required: public transport and taxation. The city is relying less on public transport and more on cars, and the best way to reverse this trend is with prices.
The report says motorists now get "heavy subsidies" for using the road. They are receiving what economists call an inappropriate price signal - that is, the true cost of the activity is not being felt by the user. The cost of using a car needs to reflect the full social and economic cost of driving. If this is done, public transport should gain a big price advantage over cars and therefore more people will be encouraged to use it. But embedded cultural expectations - especially the growing emphasis on comfort and convenience - count against public transport. The centre's modelling suggests that in the future motorists will have to pay much, much more for the privilege of driving. Attitudes to taxation and government debt will have to shift.
The full report will be available soon from the Centre of International Economics website and should make interesting (if familiar) reading.