So the UK economy is hugely biased towards the South, is it? Think again, if you subscribe to that misplaced view.
In the decade to 2012, the South East, South West and East of England economies all grew more slowly than the UK average, according to a fascinating paper from Roger Bootle’s Capital Economics this week.
Yes, some local areas outperformed. Milton Keynes and the tech-driven Cambridge cluster, of course. Bath and its surrounding area – “at the cheap end of the M3 Corridor”, according to Capital Economics – too. Peterborough, Bedfordshire and Essex made the most of their cheaper cost base.
But digitally-enabled Berkshire lagged due to high land and labour costs. Southampton and Portsmouth were brakes too, as was much of the south coast. Meanwhile, south London and Luton have suffered as the cost of labour and homes have risen more sharply than skills.
Capital Economics sees little on the horizon that will avert this trend. The real imbalance, says regional economist Richard Holt, is between inner London and the rest, “with the former experiencing rises in nominal GDP of 6.4% (in the west) and 9.0% (in the east)”.
This regional performance gulf was at the heart of the recent BBC2 programme Mind the Gap.
Presenter Evan Davis tells EG this week how he had never experienced a reaction to a programme like the one this received. Many complainants said he was talking down London; others accused him of celebrating the capital’s ascent at the expense of other parts of the country.
Only a “benevolent deity” could offer a quick solution, he suggests. But building other strong regional centres – whose reputations carry real weight across the globe – would serve the national interest better than having just the one.
Davis believes it; Capital Economics perhaps quantifies best why it matters so much. Now, here come the politicians. Attention on the issue will ramp up in the run up to May’s European elections, the Scottish independence referendum in the autmn, next year’s ?general election and the 2016 mayoral polls.
Next month, for instance, sees the Centre for Cities and Centre for London launch a new report about London’s relationship with other UK cities.
It will be the first of many.
This week’s interview with Evan Davis is the first in a new series we are calling The Outside View. Property can, ahem, be a little inward looking. We are hoping to help right that with this series.
We already have another great interview lined up for next month. Tell us whose views on this industry and the issues it faces you would like to hear via damian.wild@estatesgazette.com.
A boost for London this week: £500m of West End trophies are set to feed the stock-starved West End market: Queensbury House at 3 Old Burlington Street, W1, for as much as £200m, the £180m 33 Grosvenor Place, SW1, and the £63m 130 Shaftesbury Avenue, W1.
With £500m plus change traded in Q1 2014, volumes are almost half the level of the same period last year. It’s a welcome relief, but with 70% of last year’s deals bought by patient overseas investors, there’s no guarantee this burst of activity will be sustained.
Curiously, the government has ignored landlords of nearly 400 commercial properties in its latest compensation proposals for the £50bn HS2 project. I say curiously not because governments are ever particularly good at considering the impact of decisions on commercial property, but because the neglect could prove costly.
This week the project’s impact on homeowners was addressed. But agents fear it could be another two years before commercial compensation is considered.
As well as the uncertainty this causes investors and landlords in affected areas, the market, ministers would do well to remember, is rising.
