Briefing Note: Autumn Statement - November 2022

It was an Autumn Statement designed to calm the markets and restore trust and credibility in the Government. By many measures it has achieved its aim; reaction in the sterling and the bond markets has been muted. However, using ING's digital analysis tool, we can see that Hunt's plain-speaking comes at a political cost. The public have reacted badly to the measures even if the markets had priced them in. Monitoring the built environment's reaction reveals a sector that fails to shout loud enough about its unrivalled contribution is to the growth of UK plc.

We have evaluated public sentiment the week before and after the previous budget in September. Measuring the mood before the announcement showed that 31% of the public conversations around the forthcoming fiscal event were negative – in the week after the event that number moved to 53%.?

Despite efforts from Hunt in recent weeks to calm markets (and the public), negative sentiment accounted for over 51% of all conversations in the week before the Autumn Statement and has increased further (58%) in the hours after his statement in the House of Commons. Perhaps not surprising how vocal people have been given the measures.

Before the 23rd September (Mini-Budget), the top words associated with the public concerns around the economy and the budget included ‘inflation’, ‘interest rates’, ‘energy bills’ and ‘households’ – in the week after, and when sentiment drifted further, ‘tax cuts’, ‘economy’, ‘markets’ and ‘cap on bankers’ were some of the most used phrases. In terms of volume, overall budget-related conversations jumped 662% in that same fortnightly period.?

Assessing the public mood is important for successful communications, and there has been a marked increase in output from UK developers and asset managers on economic and budget related content. Measuring the period from that fiscal event in September to the Autumn Statement; and comparing that against the same period prior to 23rd September, shows that output has increased 265%.

The long tail of content produced by way of digital communications shows that developers and asset managers are being proactive in addressing concerns that the public and ultimately that investors may have.

Unpacking this analysis further shows that while negative sentiment rose and that developers and asset managers attempted to respond in content terms, the messaging across the built environment has not been joined up in its approach.

Across the UK, conversations around the built environment rose, but only by 15%.?While it is to be expected that the bulk of the conversation would be around the immediacy of the fiscal fallout, real estate must put itself at the heart of future economic conversations, positioning itself as a stimulus for future growth.

What does this mean for built environment communications? It’s clear that the current economic landscape is going to make life more difficult for many. Spiralling costs are already reducing disposable income, consumer spend has already decreased, incomes squeezed, and confidence is already at record lows. In a post-covid environment where our relationship with the built environment has altered significantly, ‘where’ people spend will be just as important as the ‘how’. Stakeholders in real estate will be mindful to remember the reasons that footfall has increased across our cities and towns since lockdowns. It may well be more cost effective to work from home for example, but we still crave the human, social and cultural element that our places bring. It is these places that will continue to drive value and growth.

In the hours since Hunt’s statement, some of the most common words the public have been using are ‘growth’, ‘cost’ and ‘economy’. Measuring the developer and asset manager conversation reveals that ‘investment’, ‘markets’ and ‘financial’ are most widely used. Both similar in message, but different in tone.

Communicating that places are more than just assets; that they go beyond just bricks and mortar will be crucial for attracting employees, tourists and shoppers. Those messages will create vibrant local economies, encouraging developers, asset managers and investors to continue to strive to develop best in class real estate.

Key takeaways for the Built Environment

• The Government will scrap the Investment Zones programme, instead investment will be refocused on a limited number of high potential clusters, working with local stakeholders, to be announced in the coming months. The existing expressions of interest will therefore not be taken forward.
• The UK’s headline Corporation Tax Rate will remain at 25% – the lowest in the G7.
• Stamp duty cuts announced in the mini-budget will remain in place but only until 31st March 2025.
• The business rates valuation in April 2023 will reflect changes in property values. A package of targeted support worth ￡13.6 billion over the next five years will support businesses as they transition to their new bills.
• Increase in social rents to be capped at a maximum of 7% in 2023/24.
• Northern Powerhouse Rail and HS2 high-speed rail projects will go ahead, and more than ￡600bn will be invested into infrastructure over the next five years.
• The government has agreed new mayoral devolution deals with a number of local councils, potentially increasing the proportion of people living under a directly elected mayor with devolved powers in England to over 50%.
• A new Energy Efficiency Taskforce (EETF) will target reducing energy consumption from buildings and industry by 15% by 2030. From April 2025, electric cars, vans and motorcycles will begin to pay VED (Vehicle Excise Duty) in the same way as petrol and diesel vehicles.?