28 January 2019
Plan B (and C and D) If at first you don’t succeed… keep plugging the same deal until someone gives in. With Plan A regulated to the annals of historic Government defeats, one might be confused as to why Theresa May would table a substantially similar Plan B. ‘No change’ rang the Labour backbenches as she stated her position. The only area of potential movement was on the Northern Irish backstop; but of course, that is not in her gift to deliver, and the EU are still likely to say no (in fact ‘never’, says Barnier). Whilst May might be happy to run down the clock, others are not, and a series of new proposals has emerged in the form of amendments to the Bill. Corbyn favours a more open debate on a wider range of options, notably including a second referendum. A second cross-party amendment favours a nine-month extension to Article 50 (again not in the UK’s gift) in the event of a no-deal Brexit (essentially deferring the exit to find time for something else). This appears to have an undercurrent of support, with 40 Government ministers rumoured to be ready to resign to do so. Other amendments include: blocking out more time for a Parliamentary debate, rejecting a no-deal outright and putting a time-limit on the backstop. Whilst next Tuesday is about Plan B, the real interest is in Plans C, D, and E, put forward without May’s support in a situation that seems to have slipped her control. If, however, one of the no-deal blockers is successful, then feasibly Brexiteers like Jacob Rees-Mogg will fall back to supporting Plan A; and round it goes.
Davos The IMF paints a relatively gloomy picture in its World Economic Outlook this week. The factors causing the international body the greatest concern include a slowdown of growth in China, trade tensions, the Government shutdown in the US, and the looming prospect of Brexit. IMF projections for UK growth over the next two years (1.5%, 1.6%) remain on par with France and ahead of Germany. However, IMF cited ‘substantial uncertainty around the baseline projection’ which assumes that a deal is reached with the EU, followed by a transition period. The downside risk of a no-deal was estimated by the IMF’s chief economist as up to 8% off long-run GDP. Brexit is increasingly seen not just as a UK issue, but as a potential trigger for much wider impacts across the globe. Whilst the impact of the no-deal Brexit risk is brought into sharper relief (‘the global economy is on very thin ice’ says WEF chief Klaus Schwab), commentators at Davos this week appeared more confident that it was less likely to happen. The wider discussion at Davos focusses on global inequality and how ‘Globalisation 4.0’ might affect this. In that context, technology is expected to come under fire as a driver of inequality and a catalyst for populism.
Tech towns The rise of the big tech companies in recent years, and their expansion into mega-campuses is reminiscent of the company towns of the industrial age. Whilst snaring a large tech-co with thousands of well-paid employees might feel like a lottery outcome for a local authority, there can be hidden consequences. Firstly, the dominance of a single employer creates economic risk and shifts negotiating power within a local economy. The recent threatened relocation of some locally dominant manufacturers in the wake of the Brexit vote provides examples of this. A second challenge comes in displacement and marginalisation of existing communities. The new wealth doesn’t always trickle down, creating us-and-them income brackets and unaffordable housing. Socially-conscious businesses understand how this can negatively affect their brand and hamper their growth, and are increasingly expected to be proactive about such impacts. This week Microsoft announced that it will invest a ground-breaking $500m to tackle housing affordability issues in Seattle (where jobs have grown by 21%, but housing starts have only grown by 13% leading to price inflation of 96%). The cash will largely comprise loans intended to stimulate activity and retain communities. This show of paternalism also evokes the bygone era of Bournville, which continues to draw accolades as one of the best places to live in the UK.
Productivity and wellness Many arcane methods are used to determine the link between workplaces and productivity. However, one of the simplest and undeniable measures is linked to wellbeing. If staff have continuously below par health, then increased absence through associated sickness can be easily correlated to productivity. This week the FT and VitalityHealth published its annual list of the UK’s healthiest workplaces. There are two parts to this consideration. Firstly, lifestyle risk factors, such as smoking and obesity. Whilst it is difficult for an employer to affect these, there are clear trends by region, which might mean that risk can be managed by locating in the right place to start with. Secondly, there are leadership and cultural factors such as wellness initiatives and access to facilities, which are more within the control of the employer. Data from Public Health England suggests that 1 in 3 UK employees have a long-term health condition and of these 42% considered that this affected their work. The FT study found that 6.1 productive days per annum are lost due to insufficient physical activity, whilst other studies referenced in the report point to a lack of sleep as a key driver of being unproductive. This highlights the importance not just of inspiring offices that drive interaction and creativity, but also of thought through work policies and facilities that allow employees to engage in fitness and relax as part of the work day.
Productivity and travelling Beyond wellness, downtime is another drag on productivity. In large modern businesses, often with multiple offices within the same city, travelling to and between offices is a significant source of downtime. For instance, a return trip between London’s City and West End is an hour of downtime, as is the average daily commuting time in the UK. This in itself is a strong reason for office occupiers to focus on reducing travel. Add this to the environmental, cost and disengagement issues and the case is even clearer. The recent British Business & Mobility Study of 1,000 businesses by Sewells reveals that 66% of businesses are seeking to reduce inter-office travel volumes, whereas 67% of businesses now perceive working from home as a viable alternative to working in the office, and 69% want to see fewer staff commuting to work. Particularly in those areas where car travel (67% of all travel) is the dominant mode, the benefits of viable alternatives can be significant. Technology clearly has a role to play in this, as virtual meetings become more popular. However, face-to-face meetings are still considered to be more productive, with various studies pointing to elevated persuasion and engagement. Until virtual meetings get better (they will), the solution continues to lie in office location strategy, including for instance the benefits of consolidating one’s office provision over a rail terminus.
Sacred start-up Retail is not the only sector that is facing substitution from digital business models. It might however be perceived as a high-water mark of the digital revolution that Pope Francis has this week announced the launch of a new ‘Click-to-Pray’ digital platform. With no physical product, and formed around a community of users, religion is an area of life that plays well to a digital business model. This latest self-disruption comes in the form of a global online community that is able to pray together on common issues, live-streamed by the Pontiff. Having already established his user profile (listing his location as ‘Vatican’), started a colourful blog, and having a 5* rated app on the App Store, the Bishop of Rome is well on his way to a successful start-up operation. However, this revelation may prompt concerns of a ‘Church Armageddon’. As online penetration of those praying becomes set to soar, a corresponding exodus from the aisles is only to be expected. Growth plans en route to becoming ‘the Uber for Religion’ are rumoured to include: finding an angel investor, moving to a subscription collection model and expanding into confessions.
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