By Richard Pickering, Head of Futures Strategy
Supercharged Free Ports A fairly obvious solution to the potential imposition of tariffs following Brexit is to avoid importing goods. And this isn’t as stupid as it sounds. This week a report by Mace recommends the introduction of seven ‘Supercharged Free Ports’ in the North of England forming enlarged enterprise zones including Immingham, Tyneside, (and yes, Hull). These ports would be located outside customs jurisdiction, and so manufacturing for onward sale within these zones would not attract import tax, but would stimulate local economies (the report suggests to the tune of £9bn to the northern GDP). There are c.3,500 free ports in the world; however, these are not compatible with membership of the EU Customs Union, and so the proposal would only apply in the event that we leave it. In an environment of fairly uninventive solutions to the challenges ahead, this feels like one of the better ones. As with any localised tax breaks, it would also create distortions in rent and land values across the UK (those within the free port zone commanding a premium, together with an aspired-for halo effect within the wider agglomerations, presumably at the expense of disconnected areas). Those with a vested interest in these ports and regions will doubtless be keen to promote this idea further.
Smarter London Together Last week Sadiq Khan published his vision to make London the ‘smartest city in the world’ in the form of the ‘Smarter London Together’ plan. The plan focuses on increasing connectivity across the capital, in part achieved by ‘linking 50 public buildings to the fibre network on the Tube [which will] provide extra local connectivity to the surrounding area.’ Further, as part of a new approach, ‘that the provision of digital infrastructure is as important for the proper functioning of the city as energy, water and waste management services’ the plan signposts proposed planning policies requiring full fibre connectivity for new homes to be implemented as part of the new London Plan. Accompanying this will be standardised wayleaves to enable digital infrastructure and new uses for lampposts and street furniture including the installation of smart sensors. A couple of weeks ago we interviewed the man behind the plan, Theo Blackwell, London’s new Chief Digital Officer to delve into these and other issues in more detail. You can read the interview here, which forms of part of our recently released tech-themed edition of Capital Watch.
Department stores With the recent news that House of Fraser intends to close 31 stores, and others rumoured to be following suit, is this the end of the department store? These were hugely innovative formats when they first came into being (mostly in the mid-19th century). They were the curators of style and contemporary fashion, places to be seen, and premium service providers, offering home delivery as standard. They had a clearly differentiated proposition, often on a store-by-store basis. However, for much of the past 50 years the department store has largely stood still, whilst the retail sector has been changing at lightning speed around it. In the modern world, the largest department store is Amazon. As existing physical formats have become commoditised, offering the same concessions and similar experiences, the pull of the more cost effective online store becomes greater. However, recent innovations offer the prospect of a new more purposed role. In a report released this week we have explored the history of the department store and what made it successful, current innovations that are challenging the traditional paradigm, and what we might learn from its past that might have a bearing on its future. Read more here or contact the report author: email@example.com.
Café culture In a world that is changing at an increasing pace, a careful line needs to be drawn between adopting change and preserving the best of the past. Inevitably, the latter comes at an economic cost, but potentially a social gain. In the world of real estate this usually involves English Heritage conferring listed status on noteworthy architecture. However, another route is for UNESCO to confer ‘Intangible Cultural Heritage’ status. This has so far been used in the context of endangered customs (e.g. The Art of Neapolitan ‘Pizzaiuolo’ in Italy, or the Multipart singing of the Horehronie in Slovakia – don’t ask). However, Paris is now bidding for similar protection for its bistros. Fears over increased rents and new fast eating formats have driven the request. Unlike World Heritage Sites (protected by international treaty), the preservation of Intangible Cultural Heritage is through a looser system of the funding and supporting of associated groups. Nevertheless, a precedent in Paris may give cause for reflection for others invested in tangible ‘intangible’ assets. In the UK we presently have none. However, I intend to lobby for the inclusion of ‘the lunchtime consumption of Greggs’ sausage rolls’.
A platform for change Over the past decade a significant shift in how the world does business has come in the rise of the digital platform business model. The platform acts as an intermediary, connecting buyers and sellers on each side of its network and taking a fee for doing so. The advantage is massive scalability and limited financial risk once the platform is operational. For the buyer, they get to treat centrally with many sellers, and so can choose from the whole market. That now seems to be shifting, as the platforms themselves are taking the role of supplier to generate new revenues. First Netflix started producing its own content. Now Spotify is signing up indie acts. In the real estate industry there are various agency platforms, mostly in the residential market (e.g. Zoopla). Arguably some of the serviced office providers might see themselves as platform operators. A trend for all of us in the industry to watch closely is how these platforms, having established themselves as intermediaries, move upstream into the supply of services and/or real estate in the future.
In vino veritas One can rarely go a day without seeing an article on the rise of artificial intelligence, and the prospect of robots taking our jobs. The theory of course relies on the ability of robots to become more and more intelligent… or does it? An alternative route to redundancy relies not in smarter robots, but in dumber humans. A phenomenon known as ‘the Flynn effect’ – an observed average increase of three IQ points per decade – has kept our automated overlords-in-waiting at bay for centuries. However, scientists have now found evidence that the human IQ has in fact been decreasing since the 1970s. For those of us born in the 70s, it will come as no surprise to find that we are the zenith of human existence. But what’s been going wrong since? Hypotheses include: a less healthy diet, declining educational standards and an increased and unquestioning reliance on technology among Millennials. I would proffer an alternative suggestion: British Medical Association data shows a dramatic increase in our consumption of wine starting at the point that our intelligence started to fail. ‘Wine can of their wits the wise beguile, Make the sage frolic, and the serious smile,’ said Homer.