EG London Forum: migration and EU membership

London First’s recent London 2036 report courted controversy with suggestions that negative attitudes to immigration and the EU could harm the capital. But what do our experts think?

London First’s executive director for policy David Lutton is neither surprised nor dismayed by the media brouhaha that heralded the London 2036 report launch. “The issue of immigration is absolutely critical right now,” he says.

“A vast proportion of London’s success is down to it being an open economy. Uncertainty about access to open markets or the ability to bring in skilled staff is a real threat to London’s status.”

Although the report acknowledges that responsibility for the capital’s development over the next two decades must be shared by a wide group of stakeholders, Lutton believes increasing the power of the mayor’s office will have a transformational impact on the city.

“The mayor can really move the dial on new housing,” he says, “and more fiscal responsibility will remove the uncertainty about how new infrastructure – necessary to serve a population that will have grown to 10m by 2036 – will be funded.”

Lutton is positive about the rising importance of creative and tech sectors to the capital’s economic health, though concerned that the former does not yet have all the financing muscle it needs.

“The challenge is to ensure the creative sector in London has access to funding that will push it from the number two to the number one slot,” he says.

Kevin Smith, senior partner, KPMG

“London remains one of the most diverse cities in the world and more so than elsewhere in the UK. With a significant skills challenge, especially around housing and infrastructure, it has more reason to welcome overseas workers to supplement and support a backlog of potential projects to generate growth.

“The London attitude to immigration, however, is not always reflected across the UK. A recent NatCen poll on British social attitudes found that London’s views on immigration are out of step with elsewhere – 54% of those surveyed in the capital believe immigration has been a good thing for the UK’s economy, compared with 25% elsewhere.”

Bill Page, head of business space research, Legal & General Property

“The May election is too close to call. This will create uncertainty in the weeks preceding it, but the wrong result – in particular a right-wing coalition which pushes for an early EU referendum – has the potential to destabilise London’s position as a gateway city.

“There are important mitigating factors: in particular, we can be encouraged by current polling data which indicates the UK is more sanguine about the EU than many would have us believe – in all likelihood the vote would be to remain a member. Should the worst case happen, inevitable political posturing in the run up to the vote would make new entrants to London’s financial markets wary, while incumbents would question where future growth should be located. A complete exit would crystalise these concerns. Over the long term, London could reposition itself as a financial centre offering less burdensome regulation, but the short- and medium-term implications for property will be negative.

“Currently this is speculation and binary scenarios are often diluted by practical realities. London’s long-term fundamentals remain robust and, as the driving force of the UK’s economy, we hope for a rational decision.”

Dan Bayley, managing director, central London offices, BNP Paribas Real Estate

“One of the most important reasons why London attracts foreign companies is its geographical position between time zones, and this will not change, regardless of the political landscape. There is potential that the capital’s role as the world’s pre-eminent financial centre could be challenged if an exit from the EU becomes a reality. There would be major implications for the property market should financial service businesses feel it necessary to relocate to Frankfurt or elsewhere in Europe.

“With regard to immigration, London’s reputation as a global city is partly a result of its multicultural and international nature. In recent years its emergence as a focus for international technology industries has been helped by the capital’s ability to attract the most talented staff from around the world. Any threat to stem the flow of such talent could have a detrimental impact on London’s future growth and, by inference, the property sector.”

Colin Stanbridge, chief executive, London Chamber of Commerce & Industry

“International firms flock to London as the heart of the UK economy and we must continue to welcome them with open arms. Despite some anti-migration rhetoric, unless these words are turned into action, it is likely that businesses will continue to want to take space in London. The view of businesses is clear. Our report, London and the EU, last June found that 65% of businesses believe staying in the EU, with specific powers transferred back to the UK, would have a positive impact on business and the economy.”

Nigel Kempner, executive director, Quintain

“We come across investors and occupiers from all corners of the globe and regularly receive feedback that one of the most attractive factors about London is its diverse make-up and the ability for diverse groups to operate alongside one another. London’s talent pool is immense and growing. This is what attracts the occupiers. We do not see anything that will stand in the way of that dynamic continuing, particularly with the exponential growth in the global nature of London’s occupier base.”