- The continued uncertainties which haunt the Brexit negotiations
- The wobble of the German economy and the threat of recession
- The Donald effect
- The two major UK political parties who take it in turns to stumble from one PR nightmare to the next.
I must confess that a copy of the new Z/Yen ‘Global Financial Centres Index 23’ remained unopened as I contemplated the woes of all those things which gnaw away at ‘business confidence’ and result in decision stagnation. Our Capital city needs a healthy volume of transactions to keep its life blood flowing successfully. However, my mood lifted when I finally plucked up courage, opened the Z/Yen report and read that London is still the world’s leading financial centre, despite huge pressure from New York, Hong Kong and Singapore – in that order.
What was even more interesting is that, despite the Brexit factor, we are still first choice in terms of favourable ‘Business Environment’: perhaps because of our established and respected regulatory framework, our track record in human rights and counter-terrorism, and after all, a stable political environment – all factors which the researchers cited in their report.
But all is not sunshine in the City garden. Whilst we are a Premiership champion when it comes to banking, professional services and the government/regulatory environment, we are a distinct third in the league when it comes to investment management and insurance.
This is also reflected in our own research - Market Watch – which focuses on rents across central London where, for the last two quarters, there were drops in headline rents and growth in incentives given to tempt occupiers to move - especially in the second-hand market. This quarter we report only a small ‘quarter-on-quarter’ drop in rents around Knightsbridge, EC4 and EC3, while all other areas are flatlining. Perhaps we have hit the bottom and, as we move towards March 2019, things will improve.
Actually, I think confidence is surreptitiously creeping back into our professional and private lives and the evidence bears this out:
- Manufacturers believe that output will rise over the next three months (CBI Industrial Trends Survey)
- The Business Optimism Index (CBI) has jumped 24 points to the second highest level since July 2015.
- It now looks likely that interest rates will remain at 0.5% for the remainder of this year.
Despite our national pessimism, the City is in good shape.
Less “when America sneezes the world catches a cold” and more “when London is unwell the world needs to get worried”. That, combined with the fact that a threat of a German recession will bring Angela Merkel and the EC commission to the table to do “that deal” and suddenly brand London looks like it is in control of its own destiny.