Did Rishi pull a rabbit out of the hat and deliver a Budget to give the construction industry room for optimism? For local authorities – especially those outside London – the news is certainly good. For property developers, the picture is mixed with the devil as always in the detail.
The macroeconomic view is that GDP will grow from 4% to 6.5% by the end of 2021, while unemployment will peak at 5.4%. £150bn has been set aside for government spending – a real terms rise.
This is a vast amount of money with much of it going on infrastructure investment, which is good news for those involved in building railways (£46bn), housing (£24bn), roads (£21bn), city regions transport (£6bn), cycling infrastructure (£5bn) and prisons (£4bn).
But the reality is it’s closer to £298bn (double!) because of unplanned spending to deal with the pandemic (£167bn). This is more than all the government’s departmental spending put together.
What this means is that government borrowing is expected to reach 300% of GDP, which is obviously unsustainable over the longer-term. Exactly how most of this will be clawed back is unclear, but property developers will be asked to contribute a greater share with a 4% levy applied on profits over £25m. For those in the residential property sector the good news is that £11.5bn has been set aside for 180,000 affordable new homes, which will open up more brownfield sites for development.
Is this Build Back Better in action? Will the cost of Levelling Up be worth it in the end? Let us know by posting a comment or tagging us on our social channels: