Fake News? Err Well Seemingly Not!

The leader of the free world has proclaimed that there's a lot of it around at the moment. Fake News! Locally and perhaps on a more rational level, people might be questioning the validity of some of the simply outstanding investment stories that have filled their inbox over recent weeks.   

Toyota to invest £240m in its Burnaston car plant; Derby gets the funds it wanted for Assembly Rooms (with talk of plans for a 5000-seater performing arts centre) and Becketwell (with proposals for an Ice Rink); The University of Derby to 'spearhead' an industrial digital revolution with new Science Park; and Garner Holdings to build a speculative office scheme at Denby Hall (yes Denby, not Derby).  Surely this must be #Fake News?? 

But no, the unfathomable reality is that it's all true.  In an economic environment where the UK could be serving Notice to Break its 'tenancy' of the EU in the coming days (Article 50), we would be forgiven for being astounded by the quality and scale of some of the investment decisions that are being made. On the face of it, it just doesn't seem to make sense. But then neither did the sacking of Claudio Ranieri down in Leicester and look what's happened since! 

So has Mrs May engaged a team of foreign hackers to throw a veil over the uncertainties of Brexit or is the UK economy actually purring like a Rolls Royce Merlin Engine ready for take-off? On the ground it seems like the latter is very much the case.  The UK economy is clearly in an expansion phase and businesses across the East Midlands are making investment decisions to ensure that they remain competitive.  Employment figures are good and business confidence is high.  I look at my own business and we are investing in new IT and customer relationship systems which in a flat market post 2008 was incredibly difficult to justify.  We are also looking to recruit. 

The real estate market appears to be pretty warm to me at the moment but not in an unsustainable way. Coming off the back of an enduring recession, an improvement in occupier demand was almost inevitable but whereas Brexit might have dampened the spirits, it seems the opposite is true.  Rents are beginning to rise, particularly in the industrial sector, and we are now seeing the gap between new and second hand values starting to close. There is no doubt in my mind that there is a real sense of optimism around and it may just be that there is a shift in the perception of the Brexit effect with opportunity nudging ahead of threat.

It is unsurprising, but nonetheless encouraging, that the UK Government is taking steps to mitigate the potential transitional difficulties the UK economy might suffer as we sever our EU ties.  The recently announced funding through the 'Midlands Engine' initiative will benefit the whole region and our Local Authorities should be commended for putting together the compelling funding bids which have been rewarded.  As I have said before, major schemes will only succeed with the support of public funding and, although this is just the start of what will be a long process, it is a massive leap forward for projects such as the Assembly Rooms and Becketwell.  These are schemes which will be part of Derby's social and economic fabric for generations to come and the funding announcements represent the laying of the foundations.

The University-backed Science Park at Infinity Park Derby is another exciting project funded largely from the public purse.  Driving innovation, developing new skills and collaborative working are key strands of the Derby plc's economic plan which fit fairly and squarely with the evolving Industrial Strategy for the Midlands Engine.  As I suggested in my previous column, I believe Derby can be an exemplar city as the Industrial Strategy evolves.

Much of this public-sector funding news was formally announced by the Midlands Engine team at MIPIM last week where I believe the Midlands-wide partnership successfully exhibited the regions' opportunities in a 'workmanlike' manner – more 'pie and a pint' than 'champagne and canapes' perhaps.  But the news that really startled me was pure private sector.  As I was driving down to the Cheltenham Festival it was announced on a Radio 5 Live news bulletin that Toyota was to invest £240m into Burnaston.  Wow!  

I am sure I was one of many in being a little anxious about the plant's long-term future after Toyota's uncompromising support for remaining in the EU, so this announcement is massively reassuring.  It is a huge vote of confidence in its workforce and its location. It is a clear indication that Toyota does not see Brexit as a barrier to its UK business.  What the tangible spin-off from this investment will be is yet to be seen but it must all be positive.  I am certainly keen to explore what supply chain opportunities might arise in terms of local property requirements as this could be significant to some of Derby's emerging developments.  

OK, there is surely some 'incentive' from the Government which has made the decision a little easier for Toyota but it is, nonetheless, one of the most important inward investment decisions we have seen for some time and one of the clearest indicators that the post Brexit economy may not be all that scary.

Although I might have wanted to pinch myself, all of these announcements are very real, they are not Fake News.  They demonstrate tangible contributions which will underpin the local and regional economy going forward and help to build sustainable confidence.  In turn, this should leverage further private-sector investment which will help to put Derby at the head of the field as the process of Brexit moves into the final furlong.  Although modest in comparison to the Burnaston example, I had already been encouraged to invest in my practice and I am sure this will be shown to be a prudent move.  However, my investment decisions at the Cheltenham Festival were less judicious - if only there had been a horse called 'Toyota' running!

Stephen Salloway
Contact Details:
Tel 01332 298000

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