A consensus has rapidly emerged around the correct way to respond to Britain’s exit from the European Union: blind panic.
There’s a reason for this. It’s not that new arrangements will inevitably be a disaster (though it’s far from clear that they won’t be) – it’s simply that all bets are off. It’s not clear whether we’ll stay in the single market, or whether there’ll be a recession, or whether the United Kingdom of Great Britain & Northern Ireland will even exist in a few year’s time.
Given all that, the idea that we can predict with any confidence what specific bits of public policy will look like in the near future is a bit of a nonsense. Which, for a man who writes quite a lot about housing/transport/devolution, is a bit of a problem, if I’m honest.
But we are where we are – even if we might be somewhere entirely different by this time tomorrow – so let’s survey the landscape. Here’s a brief guide to why Brexit means uncertainty for the sort of things CityMetric cares about.
One man has been the driving force behind the Northern Powerhouse, Midlands Engine and all the other names for the revolutionary idea that maybe British cities should have some measure of control over their own destinies: chancellor George Osborne.
Except, he’s almost certainly not going to be chancellor any more come the autumn. Since he’s ruled himself out of the Tory leadership contest – presumably on the quite reasonable grounds that he would lose – Osborne will almost certainly be less powerful in the next ministry than he’s been in this one.
Without anyone pushing it – and with much of the government distracted by the biggest political event to hit this country in decades – it seems likely that the devolution agenda will come to a halt. And any city that doesn’t have a devolution deal in place now – hi, Leeds – is pretty unlikely to get one.
It’s possible that grassroots pressure from local government will keep the devolution train rolling: London’s mayor Sadiq Khan is already using referendum result to agitate for more powers to London. But it’s unclear how cities without mayors would even make that case.
Oh, and local authority funding will probably be cut because that happens every time there’s a Budget in this country, so.
On which note:
We haven’t had an emergency budget yet. Once we have a new prime minister, and a new chancellor, though, we almost certainly will.
Even if the promise of an extra £350m a week to spend on domestic priorities hadn’t been a lie – which it was – that money wouldn’t materialise until we actually leave the EU, some time in 2018 at the earliest. In the mean time, economic turmoil means that tax revenues are likely to fall, and extra austerity is the order of the day.
Now personally, I’m quite a fan of Keynsianism: I reckon that making some serious infrastructure investments could be just the counter-cyclical action we need to strengthen the British economy over the next few years. Ministers, however, rarely ask for my views, and they’re distinctly unfashionable in a Westminster more concerned about the deficit.
So don’t be surprised if new grand-projets are in short supply for a while. Indeed, there’s no guarantee that those already approved will go ahead. The new line between Manchester and Leeds (£20bn), London’s Crossrail 2 (£30bn), High Speed 2 (£55bn) – any or all of them could be juicy targets for a new chancellor looking for savings.
Trying to work out what Brexit will do for housing policy is like trying to work out what your lunch today will do for how you feel tomorrow. There’s a link, but good luck trying to find it.
Here’s what we can say for certain. The referendum has hit the share price of Britain’s house buildings very, very hard. See if you can spot the day of the vote on this chart of Taylor Wimpey’s share price:
Image: Wolfram Alpha.
Explaining small movements in share prices is a mug’s game, but that is not a small movement – it’s about 30 per cent – nor is it an isolated case. The consensus is that Brexit will mean a fall in house prices. That in turn will mean the housebuilders build less, which will make it harder to deal with the fact we don’t have enough homes.
Then again, one big factor in any fall in house prices will be a rise in interest rates. Such a rise may not happen – indeed, there’s also been some talk of a fall in interest rates, effectively to negative levels, so who knows.
Even if house prices do fall, it’s unlikely to make things easier for any first-time-buyer who isn’t sat on a pile of cash, because mortgages are probably going to get more expensive: you just won’t be able to afford a cheaper house than you couldn’t afford before. As for renters, if landlords are feeling poorer – which they will be – they’ll probably at least try to increase rents. (Whether the market will bear this is another question.)
Then again, if Brexit really does mean a fall in immigration – or even just making it very clear to existing European residents that they’re no longer welcome – Britain’s population increase could slow, or even go into reverse. In 10 years time, it’s quite possible we’ll be talking about the brain drain and half empty cities once again – in which case, housing would be cheaper, but this may not be much comfort.
To sum up: nobody knows anything. But unless you’re a first-time-buyer with £200k in the bank, it’s difficult to see this as good news.
There’s more – there’s so much more. The EU directs a small fortune towards regional cultural and regeneration projects – those are all gone, and it’s hard to see anything replacing them. Universities are fretting about lost funding, too, and since they make a big economic contribution to so many British cities, that’s bad for those cities, too.
This week, hilariously, London is hosting the Business & Climate Summit, where leaders from around the globe are meant to be discussing how to implement April’s Paris Agreement on reducing carbon emissions. Climate secretary Amber Rudd says the UK remains committed – but since we’re due a new government, and since abandoning international agreements is the order of the day, it’s difficult to feel too confident.
Oh, yeah, and foreign direct investment will be frozen, at best, and a load of multinationals may or may not leave the country.
On the upside, in the immediate future, Brexit is extremely unlikely to negatively affect the tube map.
Small mercies, eh?
Jonn Elledge is the editor of CityMetric. He is on Twitter, far too much, as @jonnelledge.