Further to June’s Brexit vote, the UK continues to strive towards showing that it remains a major economic player, remaining firmly open for business.
Amidst the uncertainty, there have fortunately been a number of positive events which help reinforce the ‘open for business’ mantra, some of which are summarised in brief in today's blog post.
In one of the UK’s largest real estate deals since the Brexit vote, Wells Fargo, the third largest bank in the US by assets, has agreed to purchase a significant office in the City of London.
The move to the new building, currently under development close to the Bank of England in London’s financial district, aims to bring the bank’s staff under one single roof and will allow Wells Fargo to “more efficiently and effectively manage our operations,” according to Frank Pizzo, Wells Fargo’s regional president for Europe, Middle East and Africa.
Economy and GDP Post Brexit
As reported in The Telegraph, in it’s first official output data post-Brexit, the Office for National Statistics believes that output in the dominant services sector rose 0.4% month-on-month and 2.9% year-on-year in July.
It is reported that these findings confirm not just that there was no immediate economic collapse after the referendum vote, despite the political vacuum and financial market turmoil, but that the economy continued to grow at a very decent rate.
In a move which will bring together at least 1,400 of its London staff into a single premises from eight existing offices across the city, Apple is set to move into Battersea Power Station providing an enormous boost to the Battersea development, becoming the largest single tenant in the complex.
Although Apple’s European headquarters is still in Ireland, the Battersea operation will be one of the company’s largest worldwide.
Commentators of the more optimistic persuasion are of the view that Apple’s decision is a vote of confidence in the long-term vitality of the London economy post-Brexit and as an indication that London’s perspective as a business centre is global as well as European.
Economic Prospects Post Brexit - UK Open For Business
In figures and projections recently published by PWC, it was reported that UK economic growth held up better than expected immediately after the Brexit vote, particularly with regards to consumer spending and services. For 2016 as a whole, growth now looks likely to average around 2%.
Although PWC project UK growth to slow to around 1.2% in 2017 due to the drag on business investment from increased political and economic uncertainty following the ‘Brexit’ vote, they do not forecast the UK to suffer a recession next year.
The main reason for the slowdown will be a decline in business investment, driven in particular by uncertainty about the UK’s future trading relationships with the EU in the longer term.
Consumer spending growth is projected to hold up better, but will still slow from previous strong rates, dropping to around 2% in 2017 in our main scenario. This reflects the impact of a weaker pound in pushing up import prices and squeezing the real spending power of households, as inflation rises to well above its 2% target rate by the end of 2017.
CBI – Prospect of Taxation Cuts
Finally, in a speech at the CBI’s annual conference on the 21st November, the Prime Minister Theresa May has suggested that the Government could deliver the lowest Corporation Tax rate in the G20 by cutting corporation tax below the 15% promised by Donald Trump during his election campaign.
Corporation tax is already due to fall from its current 20% rate to 17% by 2020.
Mrs May also said the government would review the support given to innovative firms through the tax system as the Government’s “aim is not simply for the UK to have the lowest corporate tax rate in the G20, but also one that is profoundly pro-innovation."