In the recent Spring Budget, the Chancellor, Rishi Sunak, unveiled plans to launch the UK’s first Infrastructure Bank (UKIB) in Leeds. The new bank will be charged with loaning out an initial fund of £12 billion to aid infrastructure development in the region. But what does the UKIB mean for Leeds?
What we know so far
The Chancellor’s Budget wasn’t the first time that we heard about the UKIB. The Treasury has been discussing the idea since the 2020 Spending Review last November. Here’s what we know so far:
• Leeds was chosen because it is an ‘established financial hub, with access to existing and future talent, and excellent connectivity to the rest of the UK’
• Although the bank will be owned by the Government and sponsored by the Treasury, it will be a separate organisation with the capability to act independently. This will be secured by an Act of Parliament, allowing the UKIB to persist through changes in Governments
• It will have an initial capitalisation of £12 billion, with the ability to guarantee another £10 billion of funding
• The UKIB will aid the UK’s post-Covid recovery and support ‘levelling up’ across the country with a focus on bringing the UK in line to be ‘net zero’ with its carbon emissions by 2050
• The bank’s focus will be on clean energy, transport, digital, water, and waste. It will also be allowed to lend to universities, where the funds are spent on improving the local economy
• A framework will be issued ahead of the bank’s formal opening, to provide greater detail on the bank’s organisation and roadmap
What does the UKIB mean for Leeds
The picture is a little hazy on exactly what the UKIB will look like, but we can make some educated guesses from our knowledge of Infrastructure Banks launched in other countries, like:
• The Canada Infrastructure bank (managing £450 billion)
• The Development Bank of Japan (managing £105 billion)
• Germany’s Kreditanstalt für Wierderaufbau (managing £475 billion)
Infrastructure banks are actually quite common, with the UK being the only country in the G8 without one.
With the Government placing the UK’s first IB in Leeds, we can infer that the Government sees Leeds as the ideal place to launch the ‘levelling up’ plan for the North. This is a powerful signal to both small and large firms that Leeds is the place to go for top talent and investment opportunities. As the country’s workforce migrates from large expensive and isolated cities to smaller and more connected ones, we anticipate more and more businesses choosing Leeds as their new base, driving development throughout the city.
• The bank is intended to be up and running in ‘the coming months’, so while it’s unlikely that the impact will be immediate, it will be swift. We expect to see the bank start loaning funds relatively quickly, most likely from 2022 onwards.
How will the UKIB affect Buy to Let properties in Leeds?
We’ve been saying for years that Leeds is the next big thing and here is the proof. Our investment guide puts Leeds at the start of a decade-long growth plan, which is going to be driven by precisely this sort of development.
The UKIB alone is unlikely to be the cause of all of that growth, but it is putting Leeds on the map for investment in a big way. Businesses relocating from abroad as well as those moving out of London will now have Leeds at the top of their list in terms of investment location. All of this points to increasing economic activity in and around Leeds, and a consequent demand for high-quality accommodation, increasing prices of property as well as rents.
Now is the perfect time to invest in Leeds.
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