Hospitality's rescue plea, retail's new year and the London banker exodus that wasn't
Making sense of the latest trends in property and economics from around the globe.
3 minutes to read
Omicron
The UK reported 82,886 new cases of Covid-19 yesterday, bringing the weekly total to 547,606, up 52% on the previous week. Both this morning's Times and Telegraph lead on the split in the cabinet over whether any fresh restrictions will be implemented either side of Christmas.
Officials have drawn up three options for the PM, according to the Telegraph. The lowest level of intervention would see families asked to limit indoor contacts, without legal enforcement. The second, also under consideration, includes mandated curbs on mixing and curfews on bars and restaurants. The third is a lockdown.
Industry body UK Hospitality has warned that as many as 10,000 businesses risk closure without an imminent new support package, regardless of whether new restrictions are introduced.
Retail
Despite the prevailing uncertainty, Stephen Springham anticipates 2022 will be more benign for UK retail.
Should the year be unencumbered by lockdowns, 2022 should see a return to more “normalised” growth. The team expects retail sales values (exc fuel) to grow by +3.5%, in line with long term (30 year) averages of +3.6% and above 10 year averages of +3.1%.
All Retail is forecast to achieve total returns of 7.2%, with a second consecutive year of capital growth of +1.9%. But there will be very polarised performance between retail sub-sectors, with supermarkets (+6.5%), retail warehouses (+4.8%) and standard shops (+0.9%) achieving capital gains, but shopping centres (-2.4%) still seeing declines.
Retail remains a solid income play, with annual average income returns between 2022 and 2026 of 5.1%, higher than both offices (4.1%) and industrial (3.6%).
Brexit
Britain and the EU's tussle over London's dominance of euro-denominated clearing inches forward. The European financial regulator recommended the EU apply regulatory pressure in order to draw business onto the continent but stopped short of recommending the more draconian measures, such as stripping UK firms of the ability to serve companies in the bloc.
Clearing has become the focal point in the post-Brexit battle for dominance in financial services. The EU was confident it could force the sector to move in the months after the 2016 vote but securing cooperation from industry is proving tricky. In November it extended a temporary waiver that allows its banks and money managers to clear trades in the UK.
We've talked before about wayward predictions of the downfall of the UK's financial services sector, such as those predicting as many as 100,000 financial services job losses. EY continues to publish its tracker, the latest of which is out this morning and pegs the number of Brexit-related job move announcements to just under 7,400, down from 7,600 in December 2020.
Approximately 1.1 million people are currently employed in London's financial services industry.
Hong Kong
Pro-Beijing candidates have claimed victory in Hong Kong's Legislative Council (LegCo) election - the first since China introduced sweeping changes to the electoral system.
Local news suggests 82 of the 90 seats were won by members from the pro-establishment and pro-Beijing camp. Turnout was just 30%, the lowest on record.
In other news...
In a new Rural Market Update, Andrew Shirley covers polling showing the Conservatives are falling out of favour with farmers.
Elsewhere - household savings to balloon again (Telegraph), Blackstone close to deal for New York tower in strong bet on office based work (FT), and finally, if you thought hybrid working was hard, wait until 2022 (FT).