Special relationship? As the dust settles on the US Presidential election, commentators appear divided on whether this is a good thing for Brexit Britain. Renowned anglophile Donald Trump appears predisposed to a trade agreement between the UK and our largest single export market: the U.S. ($51bn), as their involvement in TTP and TTIP appears ever more unlikely. However, even when combined in a potential reincarnation of the North American Free Trade Area including Canada and Mexico, the value of this market ($61bn), would still be dwarfed by the EU as a bloc, ($273bn).
Soft starts? A report commissioned by Hitachi Capital suggests that c. £65bn of investment projects have been abandoned in the wake of Brexit. The most common cause of this has been the fall in sterling (22%), with similar weight being given to weak economic prospects (21%). The good news is that 70% of investors would re-embark on these projects if single market access is confirmed. This perhaps illustrates the relative impact of a soft Brexit (30%) in the context of a more radical scenario. Technology investments have been worst hit, with hospitality and leisure projects by comparison less affected.
No city is an island? Under proposals last week from the LCCI, employees in London should be issued with a visa to allow them to remain post Brexit. Future access should be controlled through work permits, with companies allowed to hire suitably skilled EU workers without being subject to national government quotas. London, a city reliant on almost a million EU workers, is twice as likely as the rest of the UK to perceive foreigners as good for the economy, (British Social Attitudes Survey). The LCCI proposals would give business the certainty it desires, and ensure that the capital continues to be a place where global talent is welcome. However, carving out exemptions for London can surely only exacerbate fragmentation of national identity and regional divides; let alone opening up a Pandora’s Box of practical issues.
Chu Two The preferred route for Phase 2 of HS2 has been announced this week; but leaving some none the wiser as further consultation on options is announced. The major uncertainty over the route (scheduled for 2033) seems to rest in Sheffield. The preferred option would see a spur line developed, rather than one that routes through the city centre (expensive) or stops at Meadowhall (described as too distant). Both the property industry, and affected residents (who will be offered 110% of the market value of their homes) will have to wait until next year for final confirmation. Meanwhile the construction industry has more immediately positive news as seven contractors share the spoils of a £900m contract for Phase 1.
Richard Pickering, Head of UK Research & Insight.