Market update – July 21

Fram’s July update covers house prices, “the great resignation” and the importance of flexible working.

August 3, 2021

Slowly but surely we’re opening up. If traffic in my neighbourhood is anything to go by, the regions are opening up faster than cities and offices are lagging behind other parts of the economy, but this too is slowly normalising. From September, I suspect the vast majority of office workers will be in the office about three days a week. Indeed, in a poll I recently conducted 60% already are with only 17% still with no plans to return to the office. However, if we thought locking down was hard, I think reopening offices could be harder.

According to Hamptons in the first six months of this year, and largely when the UK was in lockdown, those fleeing the capital bought 61,830 properties in the home counties. This is the highest half year figure since Hamptons started tracking such information. Now many of these movers may still be able to visit their office 2-3 days a week without much extra effort, but will all of them need or want to visit the office weekly? I suspect a significant number will look to rebalance their lives to find a role closer to home. I’ve also spoken to many individuals who are considering retiring. They’ve saved money over the last 18 months, they’ve realised they enjoy a more simple life, and they don’t want their old life back. Finally, it’s made others think that they want to push on in their career. Perhaps they felt they were treading water before and they have new energy. All of these factors, combined, whether rightly or wrongly, with perceptions of how well employers managed the pandemic will cause a huge amount of resignations. It’s already happening in the US, which is ahead of the UK in terms of reopening. In fact, the problem in the US is so acute it’s being called The Great Resignation! The Great Resignation is yet to start in the UK, but I feel it will happen in the autumn, unless there’s another lockdown and then it will be delayed. In niche markets, this will cause salary inflation. Within the City, many people have also decided to spend lockdown in their country of birth and some won’t want to return. So the problem in an international community like the City could be severe.

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It is certainly a time for leaders to work closely with their HR teams who are a great conduit between leadership and teams. Their ability to connect people, to align expectations of differing groups, and to help rebuild culture will be essential for firms who want to avoid the worst of the UK’s own Great Resignation. Many firms have done well in creating culture virtually, but it is no substitute for being together in person. My own advice to firms is to not fight the winds of change, but adopt hybrid working. It isn’t a perfect solution, there will be bumps along the way, but the prize could be excellent.

We’re often asked what trends we’re seeing, and so here’s a very brief round-up: investment banking (M&A) and private equity are still extremely busy, wealth & asset management firms are keen to grow but we expect continued consolidation in these markets, and asset finance has rebounded spectacularly. Assuming COVID can be kept to a manageable level, the City could be in for a great end to 2021 and a very good 2022.

I wish everyone reading this a great August, I hope you manage to enjoy a holiday, and I’m crossing everything that we all enjoy a more normal autumn.