With the election only 10 days away it is notable that institutions such as Goldman Sachs seem able to take a firm but conditional position on the British economy.
Upgrading their positive forecasts, the notorious Bank is forecasting a rise of 2.4% in the second half of 2020. For 2021 growth of 2% is expected, up from 1.6%, and in 2022 their forecast is raised from 1.8% to 2.1%. But, and this is the important bit, if and only if Brexit clarity and fiscal stimulus can be delivered
Whilst nothing in life is certain (death, taxes excepting), one thing that has become apparent is that pontification and politicisation does nothing to allow a positive engagement with the future. Plans remain just that and foundations cannot be laid.
The BloomSmith House view is that only part of the stasis that we find ourselves in can be laid at the door of the gnarly process of mixing political drinks like referenda and Parliamentary Democracy. We see this as the symptom. The cause is grounded to a large part in technology and the effect that this is having on the way that “normal” lives are conducted, business is done and how Government maintains its power, control and influence.
Whilst commentary of this type may seem to be far removed from the business of providing liquidity for taxation elements of capital intensive real estate projects, there is a universality to such technological change that means close attention and intelligent thought is required universally….. This close attention and intelligent thought needs to come from principal Directors on the buy and the sell side, as well as advisors.
Technology is changing/has changed traditional property classifications and usage. It has fundamentally changed valuations relatively between sectors and specifically within sectors, a prime (sic) example being retail. Technology will, as Government struggles to maintain its power, control and influence, mean that bases of taxation, such as business rates, will change to accommodate the effects of change. It will also mean that sales or transaction based taxes such as VAT will become more important in Nation states such as the United Kingdom where capital flows increase across borders and the dues required at the point of transaction become more important sources of revenue for the Treasury.
In the next article we will expand on sales taxes and how the transactional taxes may change and how the “sell side” can use this to their advantage.