Monday property news update - 13 September
Sunak's taxes, the property market's empty shelves and what London's banks think of Brexit
4 minutes to read
We have updated our House View, which is a high-level summary of our latest thinking on current trends influencing global property markets now and in the future. In the latest edition, we explore post-Covid work styles, a return to normality in residential property markets, how the retail industry is recovering from the pandemic and much more. Read it here.
Brexit
More than two thirds of the UK's banks and asset managers believe London will remain a top financial centre, despite Brexit, according to Lloyds Bank's annual sentiment survey.
The survey of more than 100 institutions is the first since Britain's official departure from the EU and can be filed away with the rest of the now mounting evidence suggesting Brexit is a grazed knee rather than a death blow to the City's prospects. Last month we looked at data showing banking's high earners were largely staying put.
The Chancellor Rishi Sunak has largely abandoned hopes of securing financial equivalence with the EU. Back in July he declared he would make the most of the UK's ability to set its own rules post-Brexit and his Mansion House speech came with a package of measures that on their own would be something of a footnote, but all together says "we're going to review so many things that we're going to create our own regime," Rob Moulton of Latham & Watkins said at the time.
The Lloyds survey suggests firms are pretty split on this approach. Almost half said that the competitiveness of financial services would improve in the next year, citing regulation diverging from the European Union model as a key factor, the remainder said they feared UK competitiveness would worsen.
Taxes
Last week Mr Sunak confirmed he'd set a date of October 27th for his annual budget and a three year spending plan to put the public finances on a "sustainable path".
Following a year in which the budget deficit has swelled to a peacetime high, everybody knows what that means. CBI director general Tony Danker is due to give a speech later today - trailed across the papers this morning - that includes some stinging criticism of the government's tax plans and urges ministers to take the opportunity in October to "flip business taxation on its head".
Last week the government outlined plans to raise £12 billion a year from an increase in national insurance contributions and dividend income to pay for health and social care. That followed March's announcement of a big increase in corporation tax from 2023.
Growth
UK economic growth slowed to 0.1% in July, according to ONS data published Friday. Economists had been anticipating growth of 0.6%, though the ONS suggested the 'pingdemic' was at least partly to blame.
A shortage of workers continues to bite certain industries, particularly construction, which contracted for a fourth consecutive month - see the full release here. This isn't just a short term issue for construction - Noble Francis of the Construction Products Association shared this eye popping chart highlighting the underlying demographic challenges faced by the industry. Some 500,000 of its UK-born workforce, or about a quarter of the total workforce, will retire over the next 10-15 years.
There is hope that a short term supply crunch in some industries is easing, particularly for hospitality. The Times covers data from Adzuna, a jobs search engine that the ONS uses in its real-time labour figures, suggesting more Europeans are looking for work in Britain since the end of lockdown restrictions, though the levels remain well below pre-pandemic norms.
Empty shelves
Tom Bill's latest piece looks at the property market's empty shelves, and considers early signs that a severe supply shortage may ease during the Autumn.
The number of market valuation appraisals remained 8% below the five-year average in August, though anecdotal evidence also points to a gradual improvement, which is supported by an early cut of the data.
In the first five working days of this month, the number of market valuation appraisals was 10.1% higher than the same period in 2019. With demand undeniably strong, how quickly supply picks up will be a determining factor for transaction volumes and prices.
In other news...
In a new Rural Market Update, Andrew Shirley weighs the latest food and drink export data, which indicates exports from the UK to the EU fell by almost £1 billion during the first half of the year.
Supply chain issues add to stagflationary winds, US business sentiment darkens on delta variant, Europe's recovery hits a sweet spot, as inflation cools, and finally, construction on shaky ground after industry’s weakest growth for six months.