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Lord Flight is Chairman of Flight & Partners Recovery Fund and is a former Shadow Chief Secretary to the Treasury.

I expect the UK to emerge from this Covid-related economic and health shakeup with permanent major changes of behaviour. These should in turn impact on the values and relative prices of goods and services.

The first most obvious area is housing, house prices and where you live. The discovery with modern communication and technology that people can work at least three days a week from home without their output suffering looks set to release a large “working from home” revolution, particularly in London and the home counties.

As a friend recently commented to me, it is a pleasure to be living most of the time in the country; it adds two hours a day to his free time and £500 per month (effectively tax free) to his disposable income.

This implies, longer term, upward price pressure on out of town housing and downward relative pressure on city centre properties. Also surely the correct economic policy for the rail operators would be to reduce fares to encourage greater usage of the network?

This economic crisis has already unleashed a significant increase in the savings rate – in the home counties plus £2,000 pa per person and rising. The main reason looks to be fear of unemployment, but there is also, clearly, a risk of interest costs rising substantially at some stage in the not too distant future.

A relatively permanent increase in the savings rate implies bad news for the service sector. Higher savings are likely to be made across the young, middle aged and older sections of the community where the latter is helping to finance the young.

Savings should logically be the largest amongst the middle aged part of the population. We are likely to see the young as the key inventors; the middle aged as the investors, and the older part of the population financing the young and predominately financing new investment.

A trend which is not yet apparent is the relative performance of Greater London versus the “Rest”. House price and interest rate developments leave London relatively less affluent and the rest of the country better off.

An apparent trend is a greater interest in education by both the young and their parents – particularly amongst the rising immigrant community who have been performing extremely well academically. This should be good for the economy.

The Conservative Government has had a rough time, at least half of this, their own fault. As the General Election witnessed, and I believe is still the case, the electorate is not interested in Communism. What it wants, particularly, is what is perceived as “fairness”.

Fairness is not just financial fairness. As the Government’s education blunders have witnessed, young students, their parents, teachers and many Conservative members of Parliament have been driven by the wish to see fairness as amongst the young effected.

As Liz Truss, the Secretary of State for International Trade, has commented, fairness is the main case for free trade. After joining the EU, we fell behind our allies in terms of trade; now we have the chance to change this.

We are in a series of negotiations with the US, Japan, Australia and New Zealand to strike new, fair free trade agreements and lower tariffs for our exporters. Talks with all four are progressing well. Round Four of the US negotiations starts soon.

From Japan we have consensus on the major elements of a deal that will go beyond the agreement the EU has with the country. We aim to have agreement in principal by the end of August. Round two of talks with Australia start in mid September and the second round of discussions with New Zealand start a month later.

These deals are an important step towards accession to the Comprehensive and Progressive Agreement for the Trans Pacific Partnership Agreement which will hitch Britain to one of the fastest growing parts of the world.

CPTPP reduces tariffs on 95 per cent of goods between members and also sets high standards in areas like digital trade and data. Membership will help put Britain at the centre of a network of free trade agreements where parties treat each other fairly, play by the rules, and help make us a hub for businesses trading with the rest of the world.

28 comments for: Howard Flight: From rising demand for out of town housing, to increases in savings, the Covid trends to look out for.

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