Human capital has London snapping at New York’s heels
UK inflation figures came in a little hot this morning. The Consumer Prices Index climbed 2.3% in April compared to a year earlier.
While it's positive that prices are now rising just a shade above the 2% target, this was at the upper end of economists' expectations. Investors pared back bets on rate cuts, almost eliminating the chance of a cut in June - see Bloomberg. The first reduction isn’t fully priced in until November, though this is likely to swing back and forth over coming months.
The major lenders announced a spate of mortgage rate cuts last week, but these figures will probably ensure that runs no further. The better five-year fixed rates at 75% loan-to-value are running at about 4.5% which, combined with rising supply, will maintain pressure on house prices.
Human capital
Monday's note discussed the French government's efforts to take London's crown as the dominant financial capital in Europe. Metrics like foreign direct investment into financial services show London pulling further ahead, which I credited in large part to London's sticky financial and legal ecosystem.
Consultancy Oxford Economics published its inaugural Global Cities Index this morning The researchers picked up on another crucial part of the ecosystem that I failed to mention: human capital. Human capital is one of five key metrics in the Oxford index of 1,000 cities, the others being economics, quality of life, environment and governance. London tops the world in human capital:
"This is, in part, due to the number of higher education institutions in the city, which helps it achieve one of the highest rates of educational attainment in the world. London also attracts many highly educated people from abroad (nearly 40% of its population is foreign born) and several global corporations are headquartered in the city to take advantage of this world-class talent pool. This should help keep population growth above—and the age profile younger than—the rate of many peer cities including New York, Tokyo, and Paris"
Quality of life
London comes second in the overall index behind New York, which Oxford credits with being the economic capital of the world. London's score is dragged down by quality of life, for which Paris scores highly.
The poor quality of life score is down almost entirely to the housing affordability crisis - London residents spend more of their income on housing than nearly every other city in the world. On carbon emissions, the capital does pretty well. However, despite the implementation of congestion charges and the ultra-low emission zone, London still suffers from worse air quality than New York and other peers. Nevertheless, on the outlook, the report is clear:-
"Fears that Brexit would lead to a decline of the city as a global financial center have not been realized. And we expect London to continue to attract migrants from all over the world to access its world-class institutions and range of job opportunities. The city is set to remain a top Global City for years to come, potentially fighting New York for the top spot."
New Towns
The Labour Party yesterday pledged to build so-called "new towns" aimed at meeting its commitment to construct 1.5 million new homes across Britain if it wins power - see coverage from Reuters here.
“Developers who deliver on their obligations to build high quality, well designed and sustainable affordable housing, with green spaces and transport links and schools and GP surgeries nearby, will experience a new dawn under Labour," deputy leader Angela Rayner said before the announcement. "But those who have wriggled out of their responsibilities for too long will be robustly held to account."
That comment highlights why building these new towns will be so difficult. If we set aside the fact that the planning system isn't fit for purpose, and whether suitable land exists, the party would like 40% of all the housing built to be affordable.
Affordable housing delivery is in crisis - I looked at the latest dire figures from London last week. However, we don't yet have an adequate funding model that enables 40% affordable housing in locations where people want to live, and that already have the infrastructure that Rayner would like to see.
UK inflation figures came in a little hot this morning. The Consumer Prices Index climbed 2.3% in April compared to a year earlier.
While it's positive that prices are now rising just a shade above the 2% target, this was at the upper end of economists' expectations. Investors pared back bets on rate cuts, almost eliminating the chance of a cut in June - see Bloomberg. The first reduction isn’t fully priced in until November, though this is likely to swing back and forth over coming months.
The major lenders announced a spate of mortgage rate cuts last week, but these figures will probably ensure that runs no further. The better five-year fixed rates at 75% loan-to-value are running at about 4.5% which, combined with rising supply, will maintain pressure on house prices.
Human capital
Monday's note discussed the French government's efforts to take London's crown as the dominant financial capital in Europe. Metrics like foreign direct investment into financial services show London pulling further ahead, which I credited in large part to London's sticky financial and legal ecosystem.
Consultancy Oxford Economics published its inaugural Global Cities Index this morning The researchers picked up on another crucial part of the ecosystem that I failed to mention: human capital. Human capital is one of five key metrics in the Oxford index of 1,000 cities, the others being economics, quality of life, environment and governance. London tops the world in human capital:
"This is, in part, due to the number of higher education institutions in the city, which helps it achieve one of the highest rates of educational attainment in the world. London also attracts many highly educated people from abroad (nearly 40% of its population is foreign born) and several global corporations are headquartered in the city to take advantage of this world-class talent pool. This should help keep population growth above—and the age profile younger than—the rate of many peer cities including New York, Tokyo, and Paris"
Quality of life
London comes second in the overall index behind New York, which Oxford credits with being the economic capital of the world. London's score is dragged down by quality of life, for which Paris scores highly.
The poor quality of life score is down almost entirely to the housing affordability crisis - London residents spend more of their income on housing than nearly every other city in the world. On carbon emissions, the capital does pretty well. However, despite the implementation of congestion charges and the ultra-low emission zone, London still suffers from worse air quality than New York and other peers. Nevertheless, on the outlook, the report is clear:-
"Fears that Brexit would lead to a decline of the city as a global financial center have not been realized. And we expect London to continue to attract migrants from all over the world to access its world-class institutions and range of job opportunities. The city is set to remain a top Global City for years to come, potentially fighting New York for the top spot."
New Towns
The Labour Party yesterday pledged to build so-called "new towns" aimed at meeting its commitment to construct 1.5 million new homes across Britain if it wins power - see coverage from Reuters here.
“Developers who deliver on their obligations to build high quality, well designed and sustainable affordable housing, with green spaces and transport links and schools and GP surgeries nearby, will experience a new dawn under Labour," deputy leader Angela Rayner said before the announcement. "But those who have wriggled out of their responsibilities for too long will be robustly held to account."
That comment highlights why building these new towns will be so difficult. If we set aside the fact that the planning system isn't fit for purpose, and whether suitable land exists, the party would like 40% of all the housing built to be affordable.
Affordable housing delivery is in crisis - I looked at the latest dire figures from London last week. However, we don't yet have an adequate funding model that enables 40% affordable housing in locations where people want to live, and that already have the infrastructure that Rayner would like to see.
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