Hello from The National and welcome to the View from London – your weekly guide to the big stories from our London bureau
Budget time
In a few hours’ time, Chancellor of the Exchequer John Healey will rise to his feet to deliver his budget. It is the first real test for Andy Burnham’s government, and by one measure, it’s already been a success.
The build-up has avoided the paralysis that hit the UK before his predecessor Rachel Reeves delivered her tax and spending plans in November last year.
That budget had such an agonisingly long build-up that a combination of speculation and leaks caused jitters in financial markets, property transactions ground to a halt, and the wealthy packed their bags for sunnier climes.
High-end property agent Beauchamp Estates carried out research into the autumn budgets of the past 11 years to see which had the most positive effect on London’s prime property market in terms of igniting sales.
The Boris Johnson and Rishi Sunak governments came top, while Liz Truss’s mini-budget unnerved the market and led to the migration of wealthy owners. Under Keir Starmer and Rachel Reeves, the market struggled and the departures continued.
After the 2024 budget the number of properties sold for more than £5 million dropped by 16 per cent, from 148 deals pre-budget to 124 deals post-budget, with the overall value of deals slipping from £1.42 billion to £1.4 billion. The market for homes worth more than £10 million declined the most, with sales falling by 25 per cent, from 51 to 38.
"Domestic UK and international buyers of property in London like political, economic and taxation certainty," said Jeremy Gee, managing director of Beauchamp Estates.
“It is not tax that stops a buyer moving. It is a buyer not knowing what the tax will be that kills a sale.”
Tom Bill, head of UK residential research at Knight Frank, hopes the greatest threats to the market – such as an even broader mansion tax than first announced – have already been abandoned.
“Sentiment in the prime London property market would improve because of what is not in the budget rather than anything the Chancellor includes,” he told The National.
For Matthew Robertson, co-founder and chief financial officer of luxury developer Valouran, the three terms he does not want to hear are capital gains tax, wealth tax and mansion tax.
“When people don’t know what’s coming, they wait,” he told The National. “Buyers pause, deals are deferred, and the Treasury loses out too. My hope is that this budget will provide businesses and investors with confidence that they can plan without constantly worrying that a new tax or policy change is just around the corner.”
Red box reveal
Mr Healey’s goal when he rises to the dispatch box is to unveil short-term help with the cost of living, stem the tide of super-rich moving abroad, while also seeking to stabilise public finances hit by spending pressures and the fallout from the US-Iran war.
We’re not expecting anything radical. His “do-no-harm” approach means he will keep his powder dry on some of the bigger issues until the government’s 10-year plan is announced.
Mr Healey will seek to strike a balance between the wishes of bond investors and government promises to ease the cost of living for households.
His options are limited by high government borrowing costs and the big tax increases introduced by Ms Reeves.
Mr Healey has said that businesses will get "breathing space" from rising costs, business red tape is set to be torn apart, and banks can expect a new levy.
He is due to set out a plan to fully fund the government's defence commitments alongside a pathway to hitting a 2035 Nato spending pledge, transfer power and funds from Westminster to regional leaders across England, and increase the minimum wage.
There has also been speculation that he may charge income tax on transfers of family businesses to the next generation, and a crackdown on online marketplaces by making companies such as Amazon responsible for collecting tax owed by retailers selling on their platforms.
Early election?
If the budget aftermath is as successful as the build-up, then an early election could be on the cards, according to our columnist Chris Blackhurst.
He says Westminster is increasingly convinced that, should Labour maintain its lead in the polls, Mr Burnham will call a general election.
In theory, he does not need to do so until 2029, but a prime minister who was not elected on a popular mandate is anxious to get on and stamp his own mark, and this may be the best moment to strike.
No one knows what the future holds, but the omens for the UK and its economy are not good. The country is heading into winter with a health service already stretched, household energy prices due to rise in January because of the Iran war, inflation creeping upwards and interest rates, and therefore the cost of borrowing, likely to climb.
The trade unions are flexing their muscles and making noises about seeking pay increases for their members, which always presents a Labour, union-supporting PM with a dilemma. Better to press the button and force an election sooner rather than later, says Blackhurst.
Muslim adviser
The UK government will soon appoint an adviser on anti-Muslim hostility to avoid another “decade of division”, Prime Minister Andy Burnham said on Tuesday.
Mr Burnham met British Muslim community leaders at Downing Street with Communities Secretary Angela Rayner for the first time since he became leader.
He acknowledged that Muslim communities across the UK had lived through “some of the worst examples of division”, including hatred online. A government adviser on Muslim affairs would be appointed shortly, he added.
Akeela Ahmed, who was at the meeting and leads the watchdog British Muslim Trust, said the role was a “positive initiative” as the community faced “huge challenges”.
“There is an awful lot to celebrate and build on in the British Muslim Community. There are huge successes in every field, from community centres to global stars,” she told The National.
“But there are huge challenges too – anti-Muslim hate crime is rising, a mosque suffers an attack or racist incident every five days, and one in six of the wider population hold hostile views towards British Muslims."
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