General Election 2019 – JLL reaction
Commenting on the large majority win for the Conservative Party, Jon Neale, head of UK Research & Strategy at JLL says:
“The resounding victory for Boris Johnson’s Conservatives in the UK election will provide business and the property industry with a degree of much needed certainty. It now looks as if the UK will definitely leave the EU at the end of January 2020, based on the Withdrawal Agreement renegotiated by the Prime Minister earlier this year. There is likely to be a bounce in activity in leasing and investment markets as investor and business confidence return.”
“Nevertheless it is important to emphasise that the longer-term direction of travel is still unclear. The Conservative campaign has focused on delivering the EU withdrawal agreement and has been almost silent on the next and most important stage of the negotiations – the future relationship – as well as the details of their domestic agenda. The approach that Johnson will take here was not clarified during the campaign.
“This may have been an electorally smart strategy, but it provides few clues as to what sort of outcomes the Government will be aiming for, and what sort of domestic policies it will adopt in response. The two are intertwined; membership of the customs union and single market has been at the heart of the UK economic model for decades, and it is hard to argue that the radical step of withdrawal would not lead to equally radical changes in the domestic model.
“The UK is at an inflection point, the nature of which will only become obvious in the coming months. It is likely to be a hectic period, given the ambitious timetable of a trade deal by the end of 2020, and the fact that Johnson has ruled out an extension to the transition period. A ‘no deal’ at the end of the year – albeit a more manageable one than before the Withdrawal Agreement – is still a real risk. The desire to simultaneously negotiate a US trade deal is a further strain. This may mean any period of market exuberance is temporary.
“There are some clues. Johnson’s large majority gives him a high level of freedom. He will not be dependent on any faction in the party, and given the targeting of more blue-collar seats, could aim for a more “one nation” style of government, in line with his tenure as London mayor. This is likely to manifest itself in greater investment in public services – particularly regional transport, which could lead to significant benefits for the property and regeneration sector outside London.
“While general business policy is likely to remain supportive, the challenges of Brexit – in economic and procedural terms – remains the main issue. The large majority also gives Johnson the opportunity to adopt a closer relationship with the EU and deprioritise a US trade deal, if he so wishes. However, this is not guaranteed, and Johnson could adopt a more US-aligned, libertarian, tax-cutting approach, which some parts of the industry would welcome – but this might risk alienating new found support in blue-collar parts of the country.”
Commenting the environmental agenda, Guy Granger, EMEA CEO, JLL, says:
“The Conservatives made lots of ambitious promises about Brexit, the NHS and Infrastructure, but their target of Net Zero Carbon by 2050 is the least ambitious manifesto, with no firm commitment on many decarbonisation issues. 40% of carbon emissions come from the built environment, so the real estate industry needs to take responsibility in fighting the climate crisis."
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