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In the Balance

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Plan for Britain  We are now a week away from serving notice on the EU under Article 50.  Although the precise contents of the letter that Theresa May will send to Donald Tusk are unknown, she has given some indication of what may be in store in the form of a 12-point ‘Plan for Britain’ released last week. This can be summarised as follows: (1) certainty (required by business), (2) control of laws (ending EU primacy), (3) strengthening the Union (a nod to Nicola Sturgeon), (4) Common Travel Area (mitigating impact on Northern Ireland), (5) controlling immigration (control rather than necessarily curbs), (6) securing EU nationals rights (although no pre-commitment on this), (7) protecting workers rights (presumably both in respect of trade and domestic law), (8) free trade (if the EU accepts this), (9) new trade (e.g. with the US and China), (10) science and innovation (continuing partnerships with EU), (11) crime and terrorism (cross-border security), (12) a smooth and orderly exit (read: transitional arrangements).

Vertigo  The Government is launching a £7.2m study into the health impacts of living and working in skyscrapers. The commission to the universities of Bath and Exeter has been prompted by concerns over the psychological impact of small vibrations and movement on some people.  The world’s tallest towers can sway more than a metre in strong winds. Whereas this is imperceptible to most, it is also thought to cause mood swings and listlessness. Densification is largely inevitable, and in many respects desirable (reduced commute times, greater social interactions, sustainable and efficient use of resources). The challenge ahead is for the ergonomic approach to planning and building design to keep pace with the rate of population growth in our big cities (ave: 3.4%, London: 5.7%, Bristol 4.5%). Alternatives to high rise are an important part of this jigsaw.

Productivity laggards  In a speech to the LSE this week, BoE Chief Economist Andy Haldane set out a view of a two-tier corporate economy where ‘leaders’ coexist with ‘laggards’. Haldane cites recent research suggesting that a fall in real estate values during the financial crisis tightened collateral constraint and credit conditions for small business, and was ‘a potent crisis propagation channel’. However, this does not explain the subsequent failure to improve productivity as asset prices have recovered. For this he points to a failure of innovation to ‘trickle down’ from market leaders, due to IP constraints, natural monopolies and management failings. This diffusion lag is creating ‘clear and widening blue water’ between the top 5% of firms and the rest. This, more than regional or sectoral disparities, is what Haldane considers is responsible for global productivity stagnation.  

Good neighbours  With Nexit-1 seemingly having been avoided in the Netherlands, a second Nexit has reared its head, as rumours emerge that Channel 5 may end the UK’s 31-year transmission of Neighbours.  With UK viewers accounting for a significant percentage of the global market, the Aussie soap is as quintessentially British as St George (Turkish), Fish & Chips (Portuguese), or cups of tea (Chinese). At its high point in 1990, the show was attracting 21m UK viewers, whereas at the same time the population of Australia was only 17m. However, viewer numbers have since dwindled and Viacom has apparently flinched at the contract renewal. Australian High Commissioner, Alexander Downer, has recently made positive statements about the prospect of a post-Brexit UK/Oz trade deal. However, sightings of Toadfish Rebecchi in London during Monday’s episode of Neighbours have prompted speculation that either he, or possibly Dr Karl, will be managing these discussions going forwards.

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Richard Pickering, Head of UK Research & Insight.

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