Brexit and housing crisis combining to cause exodus from London, think tank finds

Economist warns decline in the number of EU workers in the capital would leave the City 'particularly' vulnerable

Caitlin Morrison
Wednesday 08 August 2018 14:50
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The Bank of England governor says a no-deal Brexit will mean higher prices and “disruption to trade as we know it”

A combination of unaffordable housing and Brexit has led to an “exodus” from London, with an increasing number of young people moving elsewhere to live and work, according to new research.

Analysis by think tank Centre for London showed that job numbers in the capital reached 5.9 million at the end of June this year, up 1.9 per cent compared with the same month in 2017 – and the highest level since records began in 1996.

However, the group warned that this was driven by a “significant growth” in the number of people moving away from London to rest of the UK, and a slowdown in international migration, suggesting that the city is become a less desirable place to live and work.

London recorded the slowest rate of population growth in over a decade, at almost half the rate of the previous year, the research revealed.

A spokesperson for Centre for London said: “The continuing affordability crisis and the prospect of Brexit are dampening the city’s appeal, with the former seen as driving the rise in the number of people in their mid-twenties to thirties leaving the capital.”

In July the average rent for London rose above £1,600 for the first time on record, according to the latest Homelet Rental Index, and while house price growth in London has slowed in recent months, the average price in the second quarter of this year was £468,845 – more than double the national average of £214,578.

Meanwhile, the think tank said there were other factors spurring people on to leave the capital, with quality of life indicators such as crime and pollution worsening over the last year.

Figures showed that a balance of 106,000 people moved away from London in the 12 months to mid-2017, up 14 per cent on the previous year, which “suggests that people are looking for an alternative to London to live and work”, Centre for London said.

Net international migration dropped by 34 per cent year-on-year, to the lowest level since 2013.

The research also showed a 16 per cent decline in the number of foreign nationals registering for national insurance numbers, with a 25 per cent drop among EU citizens.

Vicky Pryce, a board member of the Centre for Economics and Business Research, said the news on job creation in the capital was “very welcome” but added: “For London, long believed to be better able to absorb shocks like Brexit due to its diversity, housing affordability and rising living costs in the capital [it is] encouraging an exodus.

“Any loss of EU workers and the likelihood of services not being covered by any Brexit deal would leave the City particularly vulnerable.”

The prospect of a no-deal Brexit has become more likely in the last few weeks, with Bank of England boss Mark Carney last week admitting that the chances of the UK leaving the EU with no agreement in place were “uncomfortably high”, and the pound has fallen to 11 month lows against the dollar and the euro off the back of no-deal concerns.

What does a no-deal Brexit mean?

Meanwhile, Silviya Barrett, research manager at Centre for London, said: “While some might interpret the drop in migration and population growth as easing the pressure on infrastructure and public services, in the longer term it has the potential to threaten their viability and significantly damage our economy.”

She added that although unemployment data was encouraging, falling 0.4 per cent to 255,000 since last year, “declining pay levels and stalling productivity are signs that there could be stumbling blocks on the horizon”.

Figures from the Office for National Statistics last month revealed that UK wage growth had slowed to its weakest pace in six months.

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