LONDON, Jan 20 (Reuters) - A proposed British high-speed rail project running between London and northern England could cost up to 106 billion pounds ($137 billion), 25% more than recently predicted, an official review seen by the Financial Times says.
The report said there was a "considerable risk" that the High Speed 2 (HS2) project's price could jump from the 81-88 billion pounds budget that was set by the government as recently as September.
The Financial Times said the review also recommended that work on the second phase of the project, stretching from central England to northern towns such as Manchester, should be paused to determine whether a mix of conventional and high speed lines could be used instead.
The review could make difficult reading for Prime Minister Boris Johnson's government which won a sweeping mandate in December with the help of many northern towns that had rarely voted for his Conservative party in the past.
Envisaged as the backbone of Britain's national transport network, the 345 miles of new high-speed track is designed to slash journey times with the type of rail service that is already enjoyed by other major countries.
However it has faced criticism over the cost with opponents saying it would be cheaper and faster to spend money on boosting existing services on conventional lines.
Johnson has vowed to increase investment in major infrastructure outside of the capital and last week his government stepped in to help rescue the regional airline Flybe.
The Financial Times said the HS2 review, led by a former chairman of HS2 Doug Oakervee, recommended that the first part of the project between London and Birmingham should "on balance" go ahead.
"Further work" is needed to assess the impact on regional growth and it is hard to say what economic benefits will result from building it, it said.
Transport minister Grant Shapps told Sky News he had received the report and the government would make a final decision in a matter of weeks. ($1 = 0.7713 pounds) (Reporting by Kate Holton; editing by Michael Holden)