The Government’s policy on interest rates and exchange rates has created a two-speed hospitality economy which has seen London keep its head above water while pubs, restaurants and bars in the rest of the country have struggled.
That’s the view of Davis Coffer Lyons director Trevor Watson, who said the difference between London and the rest of the country in terms of both operating conditions and property values was the biggest he had ever seen it in 20 years as a specialist in the sector.
Speaking following the publication of the latest Coffer Peach Business Tracker, Watson, who stressed he was not making a political point, said Londoners had more cash in their pockets thanks to Government policy.
“What has happened since the credit crunch is that the recession has had a far greater effect on the provincial economy than it has on the London economy,” he said. “One of the reasons is the way the recession has been managed in terms of interest rate policy and exchange rates.”
Watson explained that low interest rates disproportionately benefited Londoners and those in the South-east because they generally had bigger mortgages, so a fall in rates put more cash in their pockets.
Meanwhile, tourists taking advantage of sterling’s weakness have helped to shore up revenue in London eateries and pubs.
And asset values of both freehold and leasehold properties, as well as rents, have also held much more firmly in London and the South-east than elsewhere.
Watson said that he expected the gap to remain as wide as it is for the foreseeable future. “I don’t see any particular change from where we are now, where you have strong demand in London and much weaker demand elsewhere. It’s always strong in London but at the moment the difference is very profound,” he said.
The performance of UK pubs and restaurants appeared to bounce back in February, after severe weather made for a dismal January.
The Coffer Peach Business Tracker showed an increase in like-for-like sales for the month of 1.3%, compared with the same month last year. Total sales were up 3% on February 2009, while trading leapt by 18% compared with January 2010. But London’s strong performance is thought to have buoyed up less-sparkling figures for the rest of the UK.
By Neil Gerrard
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