Benjamin Franklin said: “Nothing is certain except for death and taxes.” If he were alive today he might consider adding that political and economic uncertainty was also fairly likely too – certainly since the 2008 financial crisis.
By Brent Forbes, partner at Petty Commercial Property.
Matters have been complicated by the general election outcome and the ensuing instability.
The unclear implications for Brexit, all but guarantee a period of economic uncertainty ahead – how that plays out for business is difficult to predict, never mind Lancashire business and the commercial property market.
There are some obvious negatives to consider, with consumers likely to feel the pinch. This income stagnation may cause a reduction in demand, as we adjust to the uncertainties. This could worsen if the Government negotiates an unfavourable trade deal with the EU as part of our “divorce settlement”.
Then there is the risk of inflation, driven by rising petrol, energy and food prices. However, there are still some genuine reasons to be cautiously optimistic.
The value of Sterling is down by ten per cent in just 12 months – not great news for holiday makers, but it helps exporters. Additionally, there is still fiscal headroom for the Chancellor to increase public spending to invest in infrastructure.
A continued cautious approach has seen a decade of low interest rates so it’s a good climate for business expansion programmes.
Post-Brexit uncertainty facilitated a Government makeover with cuts in the Bank of England base rate. Forecasts nosedived and confidence was expected to follow, but something unusual has happened instead – equity prices didn’t weaken and borrowing prices stayed low.
Meanwhile consumer spending has held up and businesses continue to hire and invest.
From a Lancashire perspective, I have concerns about manufacturers, as many have pan-European supply chains. Nevertheless, demand for commercial property is holding up – Lancashire presents a good value proposition, with great connectivity, geographic location and a well balanced economy.
There’s excellent space available and a legacy of manufacturing skills.
Whatever lies ahead, I’m sure Lancashire’s resourcefulness, innovation and indomitable spirit will see us overcome the uncertainties!