JLL reacts to the government’s 2020 Budget announcement

Research-based insight from JLL experts following the Budget 2020.

March 11, 2020

Overall reaction - Jon Neale, Head of UK Research:

The Government is beginning to demonstrate a co-ordinated approach to a potential Coronavirus shock, with the Bank of England announcing a 50 bp base rate cut to 0.25% to support the economy. The rate cut – and resulting falls in risk-free rates – will undoubtedly give space for prime yields to fall further.


While the Budget may not be as dramatic as some in government will have hoped, given the more pressing priorities around constraining and dealing with a Coronavirus outbreak, it demonstrates a clear commitment to supporting business as the UK deals with its effects. This represents an inflexion point in UK government policy and Conservative party strategies. 

Firstly, it signals a final end to austerity, with the government now prepared to accept a rising rather than net borrowing requirement. It is now clearly on a path of borrowing and investing.

Secondly, it demonstrates the start of a shift of its priorities for investment and its attitudes towards tax cuts, which reflect the shifting nature of the party’s voters. Investment will be refocussed towards the North and Midlands, particularly in areas such as infrastructure and public R&D spend. Tax cuts, meanwhile, are likely to be tilted towards lower-earning groups. The message to our industry is clear: while London will continue to flourish given its inherent strengths, the opportunities in the rest of the country are likely to multiply.

The scale of these shifts, at least initially, should not be exaggerated, but they are likely to be the start of a more profound trend in the longer term – even if plans for this year are sent awry by the pandemic. There are risks to this approach – London remains the nation’s economic hub and desperately needs projects such as Crossrail 2.

Meanwhile, the government seems less keen to address other, more fundamental and long-term problems – such as the ballooning social care needs of an ageing population.

Business Rates – Tim Beattie, Head of UK Rating

Get Transition Sorted:

“The Chancellor announced a wide ranging and fundamental review of business rates with the objective of reducing the overall burden on businesses, improving the current business rates system and considering more fundamental changes in the medium-to-long term.

“Whilst we welcome the government’s announcement that it intends to undertake a consultation into major reform of the business rates system and take encouragement from the objectives stated in the review, the government needs to ensure it doesn’t just repeat other recent consultations which have all led to small, iterative changes (the “sticking plaster” approach) rather than meaningful ones and to deliver them quickly.

“The retail sector has been at the forefront of the call for more radical change and in particular have coalesced around the idea that the government needs to remove downward transition at the next revaluation and we therefore take further encouragement from the fact that the review is to focus on this area from April 2021 and we therefore implore the Chancellor to “get transition sorted”

“The abolition of rates for all retail, leisure and hospitality premises with a rateable value less than £51,000 for 2020/21 is also welcome news but many won’t benefit from this measure as they don’t meet the qualifying criteria.”

Sustainability – Sophie Walker, UK Head of Sustainability:

"Today’s announcement is certainly a step in the right direction, particularly with regard to addressing social and regional inequality, but in no way can we claim that the environment is at the heart of the Government’s economic planning. Increasing research and development investment is of course commendable, but without clear subsequent support in the upcoming National Infrastructure Strategy, we still risk missing our net zero carbon goal. We stand at a critical crossroads, where the Government needs to act to ensure the Chancellor’s words aren’t simply more hot air. We simply can’t afford to look hypocritical as we seek to corral global leaders to deliver in the run up to COP26."

Residential - Nick Whitten, Head of UK Living Research:

“Today’s Budget announcement to provide additional infrastructure funding is a welcome step in the right direction to enable new housing development. A lack of social infrastructure, such as sufficient schools, GP surgeries, roads and better public transport connections, is often cited as the blocker for new housing developments making it through the planning system. This fund should be the key to unlocking the door to building thousands of new homes across the UK. The additional funding for the Affordable Homes Programme is particularly welcome as part of the levelling up agenda and providing homes for those who need the most housing support.”

 “The change in the rate of Stamp Duty for international investors was anticipated as part of the Government’s priority to ‘level up’ the distribution of wealth in the UK. However, it is vital to strike an appropriate balance in meeting this priority and enabling international investment which currently plays such a crucial role in unlocking the development of thousands of new homes in London and the UK’s major regional cities. We welcome the delayed introduction until April 2021 to allow developers to explore options to adjust their delivery models. But time will tell what the long-term impact of the increase is, and whether it will threaten the future attractiveness of the UK and the viability of some housing schemes already in the pipeline.”

Northern investment – Stephen Hogg, Head of North West:

“2019’s General Election saw the Conservatives win a sweep of former Labour strongholds in the North of England, and we welcome the Government’s commitment to repaying voter trust by increasing spend in the regions.

“The Chancellor’s announcement of £600bn of capital investment over the next five years to ‘upgrade, improve and enhance’ Britain is positive news for strategic regional infrastructure projects, such as the upgrading of Northern rail routes and additional investment into HS2. This boost will enable key regional hubs such as Manchester and Liverpool to benefit from increased growth – minimising economic inequality in relation to the South East, and allowing cities across the North to unlock potential and productivity. Crucially, investment in our regional public transport systems will also support climate crisis action plans such as Mayor Andy Burnham’s Zero Net Carbon 2038 targets for Manchester – particularly in light of the Chancellor’s commitment to investing £1bn in green transport solutions across the UK.

“Lastly, the North West’s night-time economy is expanding rapidly, and so the Chancellor’s decision to abolish business rates for the next year for smaller companies within this sector will allow it to further diversify and flourish.”  

Ian Cornock – Lead Director, Midlands Region:

“The Chancellor’s willingness to diverge from the traditional ‘Green Book’ rules for public spending, which have an inbuilt bias to the South East, should enable the funding to allow the growth of urban transport in Birmingham and the wider West Midlands to continue apace, with the extension of the metro network towards the east of the city and the airport creating a new corridor for investment. 

“This, along with the proposed re-opening of local railway stations to the south of the city and in the Black Country, will help support the Mayor’s plans to deliver thousands of new homes on brownfield sites, with a £400m boost from the chancellor to ambitious mayors like Andy Street to help get this done.

“Birmingham’s commitment to tackling climate change with a £1bn investment in a  sustainable and inclusive green transport network is to be welcomed. A traffic-free city centre and reallocated road space at the heart of its recently published transport plan – is the way to go for cities looking to compete on the world stage in the years to come. Businesses and residents alike are recognising the benefits – and being able to get to and from the 2022 Commonwealth Games venues via fast, cost-effective public transport is going to help create a lasting positive impression for visitors to the city, too.”

About JLL

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