This week, the Chancellor of the Exchequer delivered his Spring Statement; while the content was optimistic, uncertainty over Brexit loomed large over proceedings. Here is the reaction from Colliers International on the initiatives that will impact commercial property:
Mark Charlton, Head of Research & Forecasting
“The Chancellor of the Exchequer delivered a fairly upbeat Spring Statement given the current economic and political uncertainty surrounding Brexit. Given the positive state of public finances, Philip Hammond made it clear that he is committed to increase government spending assuming a Brexit deal is agreed. An orderly Brexit would result in both a “deal” dividend, a bounce in business confidence and investment, and a fiscal dividend. Mr Hammond made it clear that a no deal Brexit would result in significant disruptions over the short to medium term. Over the longer term, the UK economy would be smaller and less prosperous with weaker growth, higher unemployment and rising prices.
“The economic assessment and OBR forecasts are encouraging, with the UK expected to grow at a steady, albeit unspectacular rate over the next five years. The OBR forecast of an additional 600,000 jobs by 2023 will lead to increased occupier demand for office and industrial space, while the predicted continued increase in real wages over the forecast horizon should help to support the struggling retail sector. By 2023, real wage growth is forecast to stand at 1.3%, up from 0.5% in 2018.”
Ashley Osborne, Head of UK Residential
“Allocating billions of pounds of additional funding to support the delivery of new and affordable homes in principal sounds positive, but is the housing market moving in the same direction as our struggling education sector and the NHS? I am not convinced throwing more money at the problem will necessarily help.
“Today’s Spring Statement announcement on housing offers no real solutions, it simply masks the underlying problems. Until we fix the fundamental, systemic issues crippling the UK’s housing market, we won’t be able to repair the damage caused. The planning system, stamp duty and the barriers to borrowing are the areas creating the blockages when it comes to housing delivery.
“Hoping more money will fix the problem means the Chancellor is failing to address the root cause. Moreover, without the guarantee that the UK’s construction labour pool will be able to cope with the increased pressure post-Brexit, there is no assurance these extra homes will physically be able to be built – even if funding is in place.”
John Webber, Head of Business Rates
"It is disappointing that the Chancellor did not make any meaningful noises about reforming business rates in his Spring Statement today. The "Armageddon" on the British High Street has been well chronicled with over 70,000 retail jobs lost at the end of 2018 and more announced this year.
“As we go into April some businesses, particularly those in Central London will see the third set of eye watering rises to their business rates bills since the 2017 Revaluation. This is unsustainable. Something really needs to be done. And it needs to be done now."