Colliers International sets out its comments on:
· Budget will have less impact on UK commercial property than US Fed Open Market Committee announcement
· Fiscally neutral business rates review offers no comfort
· Support for first time buyers may be short-term help
· Northern Powerhouse – increasing recognition: redirecting state economic policy and capital spending
ECONOMIC IMPACT
Walter Boettcher, Colliers International’s Chief Economist and Forecaster said, “Despite a few interesting and useful initiatives – for example root and branch commercial rating review, further pension reforms, Help to Buy ISA etc – the UK Budget will possibly have less of an impact on UK commercial property than the announcements expected later from the US Fed Open Market Committee which will announce whether they are losing ‘patience’, or not. From an international investor point of view, global interest rate policies remain decisive along with exchange rate movements. UK businesses will welcome the stability inherent in a Budget that is long in moderation and short in giveaways. Nonetheless, a few clever reforms with respect to interest taxation will be welcomed by many.”
BUSINESS RATES
John Webber, Head of Rating at Colliers International, said ”There was nothing in the Budget for struggling High Streets paying business rates on historically high rateable values. A fiscally neutral business rates review offers no comfort – particularly in regional locations. The average shopkeeper will pay £12,000 more over the next two years due to this government’s delay in carrying out the 2015 rating revaluation. Localism and devolution of business rates receipts to places like Manchester and Cambridge will make securing rating reductions in those locations even harder – due to the elephant in the room – the billing authority.”
HIGH STREET
Steve Burnaby, Director of Retail Agency, Colliers International said, “This Budget has been a real missed opportunity for the High Street, and a disappointing Budget for shopkeepers. Whilst there are some references to changing the rating system, there is no detail. There is, however, some positive news on backing small businesses which will hopefully mean that those in the retail sector will look to grow their business. Good news for individuals with household disposable income rising, let’s hope it gets spent on the High Street!”
HOUSING
Jonathan Manns, International Planning Director at Colliers International, said “Further support for first time buyers may help alleviate their concerns in the short-term. In the longer-term, however, it’s likely to fuel demand and drive house price growth without addressing the fundamental matter of supply. We’ve consistently under-delivered housing in England for the past 30 years, largely the result of the state taking a less active role in construction. Across the boom and bust period from 2004-2012 only 24,700 homes were constructed in London during an average year, despite 58,000 being permitted. Whilst there’s support to speed up the provision of a further 400,000 news homes in London, it may transpire to be too little too late. London’s new housing targets, announced last week, still fall around 6,600 short of what is necessary to meet objectively assessed need for the next 20 years.
Anthony Aitkens, Head of Planning, added, “The introduction of 20 housing zones is welcomed, with record low levels of house building there requires more strategic and concerted effort.”
NORTHERN POWERHOUSE
Jonathan Manns, continued, “With the North-South divide growing ever larger the Government is keen to replicate London’s success in England’s northern cities. As such, there is increasing recognition that this means redirecting state economic policy and capital spending to ensure that a future ‘northern powerhouse’ has access to the same private and public-sector resources. What’s interesting from a planning perspective is the lexicon. The Coalition Government disbanded England’s regions following the last election and yet the Chancellor’s speech made clear and fresh references to them. This reflects the growing importance of city-regions such as London and Manchester in supporting economic growth.”
Mark Charlton, Head of Research and Forecasting, added, “It is great to see emphasis on supporting growth and new industry beyond London – particularly energy and automotive research in the Midlands.
SUSTAINABILITY
David Eynon, Senior Sustainability Advisor at Colliers International said, “Assistance measures such as tax breaks for North Sea Oil & Gas and investment in new seismic surveys to boost production by 15% by 2020 are not unexpected, given the huge impact that the plummeting oil price has had on the economy and jobs in Scotland – and has additional political significance in the face of the rising support for the SNP and the potential of a ‘confidence and supply’ deal with Labour at the General Election. Bringing forward of compensation for energy intensive industries will also ease the burden of long term projected energy price rises, and the freeze on fuel duty to increasingly pass lower oil prices onto consumers (‘a tenner of a tank with the Tories’) will be welcomed by households across the country.”
CONSUMER IMPACT
James Shorthouse, Head of Licensed and Leisure at Colliers International, said, “This budget appears to be mildly positive for the sector. Any measure that increases people’s disposable income, particularly amongst the young, will benefit the sector as a whole, and the cut in beer, cider and whisky duty is of course very welcome as support for some key UK industries.
INFRASTRUCTURE
Tim Davies, head of office at Colliers International South West, said:
“The South West has a strong business offering for the rest of the UK and anything that can make the region more accessible can only have a positive impact. The announcement of the £7bn transport investment fund to improve roads, air links and a new rail franchise will enable the South West to be better connected; facilitating business and tourism both in and out of the region. This, along with measures to improve internet connectivity in the remotest areas will be welcome news to businesses across the South West.
“However, the Severn Bridge toll does put an additional financial strain when doing business with firms across the border. It is disappointing that any relief won’t be felt until 2018.”