A resilient UK economy supporting regional commercial property renaissance
Since the EU referendum in June, the performance of the UK economy has surprised on the upside, defying predictions of a recession.
2 minutes to read
GDP growth measured 0.6% in Q3 and 0.7% in Q4 2016, much better than was anticipated. The forecasts of economic disaster prevalent around the time of the EU vote have for now, been quietly shelved.
The UK economy will of course encounter several disruptive forces in 2017 not least from Brexit. Principally, the start of Brexit negotiations will cause concern around the future trading environment for UK businesses.
The negotiation period will doubtless bring headlines containing fact, speculation and fiction that will raise anxiety and in some cases lead to corporate apathy. A smooth process toward a long-term agreement will clearly be definitive in terms of business confidence.
Nonetheless, whilst it is prudent to be mindful of macro-economic and political factors, the renaissance of the UK regions has momentum. There is now political will to empower the regional cities, something that arguably was missing in the past.
Even before the Brexit vote, a core part of government economic policy was to rebalance the national economy. Infrastructure investment supports current strategy alongside the devolution of power to city regions, a process that will bring newly elected mayors to some cities and importantly, allow more autonomy in budgetary spending.
The built environment is a fundamental component of this change agenda, one that is creating the right conditions for innovation and growth. Large-scale development supporting regeneration has, and continues to change not just boundaries but the appeal and growth potential for each city.
Amenity and infrastructure underpin each development plan, recognising the shift in employer focus toward offering a lifestyle to attract and retain talent.
In fact, the UK government’s own estates agenda is, in addition supporting the case for new development. The Government Property Unit’s (GPU) strategy of creating collaborative hubs has led to large-scale requirements for new office space across many UK centres. In so doing, government demand is endorsing regional development decisions and creating new regional employment opportunities.
Despite the challenges ahead, the transformation of our regional city centres will continue. Economic performance will, of course underpin the pace of change. Nevertheless, the changing regional tide is a long-term play that will outlive short-term shocks.
Encouragingly, the latest Knight Frank forecast for the UK economy indicates growth of 1.5% in 2017. Albeit lower than 2016, this is one of the highest growth rates expected of any European country and crucially should maintain a steady path toward transforming our regional cities.
Read the full UK Regional Cities Office Market Review here