After my last two articles this year avoided the subject, I make no apology for returning to Brexit.
Imagine my joy at a recent City AM front-page headline, ‘London real estate nears record year’. Commercial transactions in London will top £20bn this year. On the same day, I heard how strong the West End office letting market continues to be.
I was not surprised last week to hear two global investment banks that were part of Project Fear confirm that they will not be moving thousands of jobs to the EU after all. Nor was I surprised that two other major US financial groups continue to invest in their huge new City HQs, despite being vocal advocates and major donors for ‘remain’. The City is employing many thousands more people than a year ago, while the UK employs more than 300,000 more people.
Outside the M25, we are seeing strong demand for a range of investments, as investors both new and old, domestic and overseas, continue to chase income. Yields are hardening in certain sectors as buyers are factoring in rental growth. New industrial property is nearing gold-standard status.
So much for the doom and gloom of many in our industry at the start of the year, so is it all thanks to Brexit, not despite it?
Other news in October includes an EY report showing the UK remains the third most attractive investment destination for mergers and acquisitions, behind China and the US.
Meanwhile, a new Colliers report confirms London retains its place as the top city among 50 European cities, based on a combination of talent, location, quality of life and cost, increasing its lead over Paris in second place.
The real rivals to the City are New York and Hong Kong, not the EU, which is why we should be concerned over MiFID II, where the FCA has unnecessarily gold-plated EU legislation, threatening high-quality research departments and the volumes of equities trading. The City’s global competitors are not imposing such constraints.
The true threat, however, to foreign investment into the UK is the risk of a Corbyn government. Labour leaders are believed to have recently asked the Treasury to model a 90% higher rate of tax.
Successful businesspeople find ways round obstacles
The UK economy is at a workmanlike, robust equilibrium at the moment. Everyone is worried about the future, thinking a downturn is coming, yet actually the market is climbing a classic wall of fear. There is no oversupply of product, markets are not exuberant, people are working hard over long hours and businesses are having to be creative and smart to survive and thrive.
There is always uncertainty in every boardroom and the most successful businesspeople find ways round obstacles put in their way. The latest GDP figure surprised the supposed economic experts, while the relentless, deflationary impact of technology is holding down inflation, apart from the one-off currency-led inflation level.
The current economic circumstances are not the traditional conditions in which to increase interest rates, yet the governor of the Bank of England has raised them. His track record is woeful: three times he threatened to raise rates then didn’t follow through, because conditions were not as he forecast. Instead, he cut rates when it was not needed, leading to a weaker sterling, and now he risks growth at a crucial time by raising them.
Whenever before has the Bank of England raised rates, while simultaneously actively complaining about the UK’s weak economic prospects? The truth is that the Monetary Policy Committee only raised rates to protect the governor’s position, as he had boxed himself into a corner of expectation. If it had not increased rates, his job would have been untenable. He is a threat to our economy and it is time for him to go.
We may not be well led at the moment, but positivity, creativity and hard work will see us through the haze.