Manchester economists spell out a new vision

01st October 2020

By Will Leyland

It’s difficult to find another time in history that set such a precedent for government economic policy as the hyper-speed changes in 2020.

Governments tend to plan firstly in yearly, but in more detail across 5 years and then decades when it comes to infrastructure investment, public spending and tax changes. Each of these needs to be meticulously costed and forecasted as they can have long-term and short-term effects that can’t be foreseen.

So, when something like a global pandemic comes along and forces you to shut nearly all of your national economy it’s not so much of a bump in the road as a careering bus crashing off a bridge on fire.

To give an example, the government had forecasted that, according to public transport trends, that a further 10% of people would be working from home in 20 years’ time, taking the total to something like 25%. The ONS most recently published data showed that nearly 50% of people started working from home almost overnight.

That’s realistically about 20 years’ worth of government economic planning down the drain in less than 12 months. The question of course remains whether things are ever likely to return to the way they were before. The answer to that isn’t likely to be known until our children are in high school or later.

A new plan

The Greater Manchester Independent Prosperity Review, published last week, puts forward some ideas and was authored by Professor Diane Coyle of the Bennett Institute for Public Policy at the University of Cambridge and Mariana Mazzucato, professor in the economics of innovation and public value at University College London, both Manchester residents.

The review, commissioned by Andy Burnham, Greater Manchester mayor, said central government must hand over more power and funding on skills and health.

The report goes on to detail that Manchester serves as a prime example of the type of successful local economy, growing at a rapid rate, that will need focused government help and support in order to continue into further growth.

Manchester, a £63 billion economy with a population of 2.8 million saw a jobs explosion in recent years in sectors such as hospitality, leisure and retail with businesses flocking to the Greater Manchester area.

This presents a unique risk to the city as these sectors have been some of the hardest hit in the pandemic and the Mayor argues that government should ensure the long-term protection of these jobs and industries to help the local economy prosper.

Manchester property

One huge success story around the area has been that of the property boom seen in the past decade, with much of the landscape of the city centre changing rapidly with new office buildings, residential buildings and businesses coming into the area.

Newly wealthy young Mancunians have triggered a huge rush for prime Private Rental Sector (PRS) properties in the city centre area and beyond.

This, in turn, has attracted investment from all over the world and Manchester’s private residential property construction has boomed ever since. With wages increasing regularly and demand carrying with it, there has been no shortage of demand for these properties and this in turn has driven yields and rental growth.

There’s little doubt that the government will assist the local economy and, broadly speaking, Manchester’s local economy has been the architect of its own success. This feels unlikely to change despite economic pressure.

Are you looking to invest in Manchester buy to let? Get in touch today!

Did you find this article helpful?

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Manchester economists spell out a new vision

01 October 2020

It’s difficult to find another time in history that set such a precedent for government economic policy as the hyper-speed changes in 2020.

Governments tend to plan firstly in yearly, but in more detail across 5 years and then decades when it comes to infrastructure investment, public spending and tax changes. Each of these needs to be meticulously costed and forecasted as they can have long-term and short-term effects that can’t be foreseen.

So, when something like a global pandemic comes along and forces you to shut nearly all of your national economy it’s not so much of a bump in the road as a careering bus crashing off a bridge on fire.

To give an example, the government had forecasted that, according to public transport trends, that a further 10% of people would be working from home in 20 years’ time, taking the total to something like 25%. The ONS most recently published data showed that nearly 50% of people started working from home almost overnight.

That’s realistically about 20 years’ worth of government economic planning down the drain in less than 12 months. The question of course remains whether things are ever likely to return to the way they were before. The answer to that isn’t likely to be known until our children are in high school or later.

A new plan

The Greater Manchester Independent Prosperity Review, published last week, puts forward some ideas and was authored by Professor Diane Coyle of the Bennett Institute for Public Policy at the University of Cambridge and Mariana Mazzucato, professor in the economics of innovation and public value at University College London, both Manchester residents.

The review, commissioned by Andy Burnham, Greater Manchester mayor, said central government must hand over more power and funding on skills and health.

The report goes on to detail that Manchester serves as a prime example of the type of successful local economy, growing at a rapid rate, that will need focused government help and support in order to continue into further growth.

Manchester, a £63 billion economy with a population of 2.8 million saw a jobs explosion in recent years in sectors such as hospitality, leisure and retail with businesses flocking to the Greater Manchester area.

This presents a unique risk to the city as these sectors have been some of the hardest hit in the pandemic and the Mayor argues that government should ensure the long-term protection of these jobs and industries to help the local economy prosper.

Manchester property

One huge success story around the area has been that of the property boom seen in the past decade, with much of the landscape of the city centre changing rapidly with new office buildings, residential buildings and businesses coming into the area.

Newly wealthy young Mancunians have triggered a huge rush for prime Private Rental Sector (PRS) properties in the city centre area and beyond.

This, in turn, has attracted investment from all over the world and Manchester’s private residential property construction has boomed ever since. With wages increasing regularly and demand carrying with it, there has been no shortage of demand for these properties and this in turn has driven yields and rental growth.

There’s little doubt that the government will assist the local economy and, broadly speaking, Manchester’s local economy has been the architect of its own success. This feels unlikely to change despite economic pressure.

Are you looking to invest in Manchester buy to let? Get in touch today!

Will Leyland

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