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The evidence has become even more compelling since the vote. Property data provider DealX has published a comprehensive report analysing the impact on the London rental market of the loss of EU passporting (see here). Their initial study has identified over 26 million sqft of office space in London that has a high degree of vacancy risk. Even more alarming is the current dependence on London of British finances. On 7 July 2016, Centre for Cities published “10 years of tax - How cities contributed to the national exchequer from 2004/05 to 2014/15”. The report can be found here. The reliance on London has increased over time. The city has seen its share of the urban tax take increase considerably. In 2004/05 London generated as much economy tax as the next 24 biggest cities. In 2014/15 it was almost as much as the next 37 cities. This represents almost 30% of the total. The economic gap between London and the rest of the UK needs to be closed very significantly, but this should not be by undermining the financial services industry and London more generally. A post-Brexit world without access to the single market would be hugely damaging to both London and the regions.
The real estate industry should seek to play a key role in advancing regional regeneration, but this does not mean that we should remain silent on the impact of the decision to leave the EU. I offended a couple of readers of my newsletter by describing this as a collective act of national stupidity. I commented that the economic impact could be anywhere between “OK” and “oh crap”. The key determinant of where we are on the spectrum will be access to the single market.
This comes brings us back to the danger of talking up the market. If we, the real estate industry and business more generally, collectively seek to argue down the impact of Brexit to protect the market, we run the huge risk that politicians conclude that the difference between a hard Brexit and Brexit lite is not great. This would have the potential for disaster.
As a real estate industry we need to keep lobbying, both for the regional regeneration that will help resolve the sense of abandonment that provoked such a strong protest vote and also for an EU outcome that allows continued access to the single market.