By Richard Pickering, Head of Futures Strategy
Hung In unwelcome news for Theresa May, modelling released today by YouGov suggests for the first time that the Conservatives will not come out of the General Election with an overall majority. With the Lib Dems (fingers burnt) ruling out a coalition with Labour, Labour (wanting to win in Scotland) ruling out a coalition with the SNP, and all ruling out a coalition with the Tories, the result would be a hung parliament at a time when the UK needs decisive leadership. If this proves correct, it would be a disastrous misjudgement and campaign by May, whom 20% of the electorate still do not identify as being the current Prime Minister. However, the projection is unique in its findings, and poll data has a habit of under-estimating the extent of the Tory lead, (ask Ed Miliband). The bookies have May as 1/8 to be Prime Minister after the election. Curiously, Boris Johnson is still being offered odds of 50/1.
The whole truth ‘Neither Conservatives nor Labour are properly spelling out the consequences of their policy proposals’, so says the Institute for Fiscal Studies(IFS) in a statement that probably doesn’t come as much of a surprise to most. The differences between the two manifestos are stark. On the one hand the Conservatives promise low tax, but the IFS believes that even lower spending and greater austerity would be a necessary consequence if they are to balance the budget by the mid-2020s. On the other, Labour promises more spending, delivered through raising taxes to the highest ever levels in peacetime. However, the IFS states that even this ‘would not work’ and believes that increased taxation of a wide population, rather than a handful of super-rich would be the necessary consequence.
Climate Change Research released this week suggests that cities could be 8 degrees warmer by 2100. Whilst this may sound an appealing prospect for those in Inverness, the report cites a median loss of 1.7% of city GDP by 2050, with the worst affected losing more than 10% by 2100. The impact on cities is worse than rural areas due to the ‘urban heat island’ impact of concrete and asphalt storing up heat. Other studies have shown that the ‘adaption economy’ (the cost of preparing cities for this change) is typically less than 0.5% of city GDP, with poorer (often more vulnerable) cities spending less on account of other more immediate priorities. A key business risk is supply chain disruption (due to extreme weather), whilst property risks include flooding, subsidence and over-heating of commercial buildings and infrastructure.
Digs Rent tends to be an economic residual; and so it is generally true that the higher the local wages, the more one can afford to pay and hence the higher the cost of housing. But what happens when you can’t afford to pay anything, because you are a student? A study by Student.com reports that the UK enjoys three of the most expensive (London, Oxford, Cambridge) and three of the least expensive (Hull, Dundee, Sunderland) student rents in the world. Arguably the best cities act as a magnet to the best universities; for instance in recent years London has pulled in a number of outposts from regional universities. An alternative explanation is that it is the presence of a strong university (e.g. Oxford) which drives the performance of the city (or city quarter). Either way, it seems that in many cases high rent is a feature of top institutions, and hence potentially a barrier to entry for those less able to afford it.