So, that’s it – Boris Johnson has won a majority, we’re ‘getting Brexit done’, and now, in his own words, we can “put years of rancour and division behind us and move forwards as one”.
I’m not sure that it will be a smooth ride, but we’re now on a fairly solid footing to kick off from. There’s a Budget coming up on 11th March that will give the Government and in particular the new Chancellor, Rishi Sunak, an opportunity to set out their stall.
We’ve heard a lot about re-balancing the economy by ‘levelling up’ regional economies to match the prosperity of London and the south-east. The Budget will be where we find out the detail and substance behind those promises.
We can expect to hear much more of initiatives like the ‘Towns Fund’ that promises up to £3.6 billion to revive parts of the country suffering from long-term decline. These are exactly the sort of places that went from red to blue on the electoral map back in December, so delivering for these communities will be high up on the Government’s agenda.
While there are no guarantees, these regeneration projects are likely to stimulate more private investment in these places too, and this will likely raise the prospect of increased demand for short-term finance.
We’d like to see the Government also step up its efforts to get more homes built, and existing properties brought into use. The approach in the past has always been focused on large-scale builders, who in turn look mainly to the south-east, where they see the biggest dollar signs.
If the Government is serious about ‘levelling up’ it will instead give much greater priority to smaller-scale developers all over the country, who aren’t sitting on large land-banks and so have a strong incentive to get on and deliver.
As well as the Budget, a lot also hinges on the approach taken by the new governor of the Bank of England, Andrew Bailey, who takes up his role the following week. The economy is still growing anaemically, and an already weak pound is likely to come under renewed pressure as trade talks with the EU continue. The public finances also seem set to deteriorate as the grip of ‘austerity’ is loosened.
We will quickly find out whether the new governor is an interest-rate ‘hawk’ or ‘dove’. How he goes about handling these competing demands will be an important factor in how the economy as a whole performs as the UK looks to make its way in a post-Brexit world.