LONDON — The UK’s capital is beginning to feel the effects of Brexit and to “wobble,” according to a new report by the Centre for London, while a separate study claims Chinese millionaires are cooling on the capital.
The Centre for London report says London is experiencing a faltering housing market, a slowdown in the number of EU citizens seeking work, and weaker job creation. Although London’s unemployment rate is at a record low — 5.5% — job creation has slowed, and is now roughly on par with the rest of the UK, having been significantly higher after the 2008 financial crisis.
The number of foreign workers seeking employment has fallen by 15% in the last year, while business activity growth is at an 11-month low. The report said this is likely due to the political uncertainty caused by the snap election result and Brexit.
“London has shown remarkable resilience in the years following the recession. But its growth has not been painless. Levels of inequality have soared. Congestion, pollution and the housing shortage have all worsened,” said Ben Rogers, founder and director of the Centre for London.
“While no-one knows how Brexit will play out, this new analysis suggests that London’s economy is beginning to wobble. It also highlights the need to tackle London’s critical challenges to ensure it is in the best possible position to deal with Brexit,” he said.
Although the UK and London’s economies performed better than expected in the immediate aftermath of the Brexit vote, consumer confidence has dipped this year, and there has been an increase in inflation as well as negative wage growth.
The annual rate of London house price growth is now less than 3%, its weakest level since 2012, and is now slower than the rate of growth across the rest of the country.
“The next few years will be historically defining for the City, for our capital and for the country at large,” said Catherine McGuiness, chairman policy and resources committee for the City of London Corporation. “Firms of all types are grappling with increasing uncertainty, underpinned by Brexit and political change.”
The UK has also slipped from second to third place in the list of preferred destinations for Chinese millionaires, according to a separate report by Hurun Report and Visa Consulting Group. The US remains in the top spot, but Canada beat the UK to second place in the latest survey.
The report, which surveyed 304 Chinese millionaires worth between $US1.5 million and $US30 million, found that about half were considering moving out of China, which it attributed largely to pollution problems and education.
While this may not sound like much of a problem, overseas investment contributed £197 billion to the UK economy last year and China is one of the biggest global investors, both on a corporate level and in terms of overseas spending by its nationals.
Despite the survey of Chinese millionaires, the Centre for London’s report shows that Chinese tourism levels remained consistent in 2016. Tourists from North America and Europe remained relatively consistent, owing in part to a weaker sterling. London also saw a significant increase in visitors from Oman, Bahrain, and Qatar.