The State of Britain

South East property prices drop sharply, significant economic activity planned for Southampton and Newbury and West Berkshire focuses on local economic development

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Unemployment in the South East ticked up by 5,000 to 155,000 between December and February, an increase of 0.1% to 3.3%. At 2.6% and 5.6% the SW of England and the North East had the lowest and highest unemployment rates in the country respectively. The national unemployment rate stands at 3.9% and UK average earnings grew by 3.5% or by 1.6% after inflation.

South East average property prices fell sharply by 1.7% to £315,700 during the month which meant annual prices had dropped by 1.8%. In comparison, UK prices dropped by 0.8% to £226,234 during April which cut the annual growth rate to 0.6%.

Some high value development projects were announced in the region this month. First, Exxon Mobil will invest more than £800m in an expansion of Fawley Refinery on Southampton Water. The project will increase the production of ultra-low sulphur diesel by almost 45% or about 38,000 barrels of oil a day reducing UK imports. Second, US/UK developer Lincoln MGT says it will transform its Station Hill site near Reading railway station in a £750m project. Planning permission for the six-and-a-half acre area was granted in January 2015 so much of the site has already been demolished. Plans to build 538 new flats have been submitted as part of the first stage.

In West Sussex, councillors have approved a new business park in Billingshurst and a roundabout on the A29. The project on the northern edge of the village will create industrial units, a petrol station, ancillary retail space and a drive-thru cafe. The eight hectares of land is north of a 475-home development currently under construction and will be accessed by a new roundabout on the A29. On leisure developments, Premier League side, Bournemouth, will start work on a new multi-million pound training complex at the 57-acre former Canford Magna Golf Club site and in Hampshire, a new £16m leisure centre has opened in Andover.

On regional infrastructure, coast-bound traffic on the M20 returned to three lanes at 70mph, while London-bound traffic continued to be restricted to two lanes at 50mph, after Highways England deactivated Operation Brock – the no-deal Brexit plan in which one side of the motorway was reserved for lorries. In Southampton, work started on the £14m Windhover roundabout project as Highways England improves access to the M27. In Oxford, a £41m project to store and feed electricity into the city’s grid which will provide ground-source heating to c300 homes and 20 vehicle charging points has started trialling. A large battery is connected to an electric substation in Cowley which then feeds the local grid.

Despite the very good regional unemployment figures, there have been a few blackspots. Kimberly-Clark’s investment of £95.4m across its sites at Barrow and Kent will improve productivity but the efficiencies are expected to lead to the loss of 110-130 jobs in Kent and c20 at Barrow. The sites produce Kimberly-Clark’s Andrex and WypAll products. A contracting business David Einig Contracting Ltd, based in Thame, has gone into liquidation leaving more than 100 staff without jobs. Three Debenhams stores in the region will close as part of the new owners restructuring. The shops in Southsea in Hampshire, Slough in Berkshire and Witney in Oxfordshire will be axed.

A new economic development company has been set up to boost the Newbury & West Berkshire economy. The not-for-profit company is non-political and independent of West Berkshire Council. It is hoped that the two organisations will work alongside each other to achieve similar aims such as the retention of a young workforce. Start up funding has been secured and the venture has achieved some support from high profile local businesses; now key stakeholders need to be identified and funding models explored. It is not clear how the new company will work with the Thames Valley Berkshire Local Enterprise Partnership.

Two regional companies Surrey Satellite Technology Ltd and Oxford Space Systems are to develop an ultra-low-cost radar satellite which will hopefully achieve its first flight in 2021. Satellites that currently operate in this field are expensive but the firms’ satellite can observe in all weathers and at all times of the day using the latest miniaturisation of electronics. The development work is being supported by a grant from the UK’s National Space Technology Programme.

On regional transport, a new £10m freight ferry has arrived in Southampton to join Red Funnel’s fleet. Red Kestrel, built by Merseyside shipbuilder Cammell Laird over nine months, will operate between Southampton and the Isle of Wight. In the air, Staycationing is driving growth at Southampton Airport with Manchester the most popular destination followed by Edinburgh; the 11,000 Easter passengers who flew over the period represents a c44% uplift. The Brexit uncertainty and weak pound that is driving Staycationing has conversely impacted international travel. This is evidenced by FlyLolo, which pulled its Southampton to Skiathos twice-weekly route; about 2,000 passengers were affected.