HAMISH MCRAE: Anyone pondering future of post-Brexit UK can find clues in company floats


Anyone pondering the future of the UK in the post-Brexit world can find some clues in the sort of companies that are being floated on the market, or planning to be floated, right now.

Regional law firm Knights has just launched an IPO on AIM for more than £100m – small compared with the global legal giants, but a fascinating test as to whether the quoted company model is more appropriate for professional service firms than the partnership model. We’ll see.

Much bigger is the wealth management firm, Quilter, which has just been spun off from Old Mutual, and is now valued at around £2.8 billion. Up-and-coming possible floats in the £2 billion league include the education group Cognita, which runs private schools in the UK and has more recently moved to establish a global network in Spain, South America and South-East Asia.

Booming: Professional activities such as lawyers and wealth managers are key generators of the UK’s surplus on service earnings

Booming: Professional activities such as lawyers and wealth managers are key generators of the UK’s surplus on service earnings

Booming: Professional activities such as lawyers and wealth managers are key generators of the UK’s surplus on service earnings

And waiting in the wings is Aston Martin, which was primed for an IPO with a value of up to £5 billion, though this will now be delayed until the Trump tariff situation is clearer.

Put these together and what do you get? Professional activities such as lawyers and wealth managers are key generators of the UK’s surplus on service earnings, the second largest in the world. The UK is really good at high-end engineering, with Aston Martin a jewel in the crown. And British private education is the best globally, though because so much of it has operated under charitable status, it is not really valued in the marketplace.

These are sectors that are likely to grow over the next 30 years, and are ones that would be relatively hard for other countries, with the exception of the US, to replicate. There are many other sectors which will prosper, and where Britain has an advantage. This is just a snapshot – but a snapshot that carries a message, and a positive one.

Changing spaces

What will become of the High Street? More and more purchases are made online. It follows that we will need more out-of-town warehouses and fewer in-town shops.

The easiest way to get our minds around this is to start by accepting that property use has always been changing. Medieval cities had shops on the ground floor and accommodation above. Space was made available for markets. There were no office blocks, because there was no need for them. And there was of course no need for car parking.

Then came the 19th century. The railways changed land use and created suburbs. Cars extended those suburbs. Supermarkets and shopping malls shifted retail from city centres to the outskirts. Office blocks sprang up. Now banks are being turned into flats and restaurants.

The next great shift has five big themes. First, there is this reduction in need for retail floor space. Second, there is increased need for housing and in particular flexible housing, as more work is done from home. Third, there will be less space for all-day city-centre parking, which will create huge opportunities for redevelopment. Fourth, there is less of a need for office space as we learn to use the space better. Finally there will be increased demand for entertainment, recreation and leisure activities.

Scary? Maybe for John Lewis and other old-style retailers, but for towns and cities is it a wonderful opportunity to fashion themselves in ways that will make them nicer places to live and work.

Fortunately the fashion in architecture is to try to design buildings that are beautiful. Concrete Brutalism is out, and not before time. There is a fashion, too, to adapt existing buildings rather than tear them down and rebuild.

What is happening is disruptive and there are enough streets with shuttered premises covered in graffiti to warn of what can go wrong. But attractive and safe High Streets with a range of activities can be preserved and developed into something even better.

Market message

It is a simple point but one that needs making. Markets do not like trade wars. The increasingly strident tone of the US Administration, plus the response from Europe and China, had seriously knocked share prices around the world.

Then came a softer line and, hey presto, shares had the best day for weeks. Insofar as Donald Trump wants to be judged by the markets, the message is clear.



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