Beware the false dawn

Be aware, vacancies in Q1 2024 are below Q1 2023 levels

As we approach the end of April, the general consensus is that the market is on the up, that Q1 was a busy quarter and there is positive sentiment, looking ahead. When you compare Q1 2024 to Q4 2023, it is not surprising for sentiment to be as such, after all, there was an 18% increase in vacancies quarter on quarter!

Nonetheless, to paraphrase Mark Twain, there are lies, damned lies and statistics, and nowhere is that statement truer than when it comes to the economy. But let’s start with data:

First of all, Q1 is always the busiest of the year, so seeing a surge quarter on quarter is statistically normal (when comparing Q4 to the following Q1.)

Spotlighting this year so far, Q1 2024 finishes with fewer vacancies than Q1 2023 and April 2024 is on track to have fewer vacancies than April 2023

While there has been a marked uptick in VC funding into technology firms, which has manifested in IT picking up, the investment banks remain muted and commercial property still is struggling with occupancy ratios.

While the advantages London has as a global city are obvious the solutions are not. What can be done, so more companies want to IPO on the London Stock Exchange?

For context, in 2023, there were a total of 23 IPOs, which was the lowest total since before 2010. See here Whilst for the USA it was also not the busiest year, 2024 has already rebounded. See here Does that mean London will naturally rebound too? That seems dangerously complacent…

The concern is that 2024 is most likely going to mirror the trend seen in 2023 as things stand. With inflation remaining stubbornly high, the Bank of England is unlikely to reduce interest rates further. Meanwhile, the Q2 lull is already in effect and as election comes ever closer, increasingly, businesses will defer investment, until there is clarity around policy. Indeed, still too much is unknown regarding the stance of the Labour party. 

However, tax does distort markets, and the challenge is, taxes have been imposed which have made certain sectors uncompetitive.

For example:

  • VAT on tourist shopping: Now, when people come to Europe, they still pass through London but leave a day earlier and do their shopping in Paris. As a result, retail in London has seen no real uplift despite tourism numbers being above pre-pandemic levels. Paris, in contrast, is booming.
  • Share transaction tax: With Amsterdam offering a more deregulated exchange, and NYSE offering deeper capital markets, for the LSE, this tax is starting to cause a real problem. Why list in London when there are so many other places that don’t have this tax? Is this part of the reason London is struggling to be attractive for IPOs?
  • Now the changes to Non Dom tax, whilst making good headlines and appeal to the politics of envy, also arguably are bad economics. HNW’s are unlikely to accept the terms of residency at such a high price, and already the signs are, people are moving with their feet. The London economy will be hit hardest overall.

So what next?

Well this current Government are clearly on their way out, so while Sunak is doing his best to keep a stable ship, it is for Starmer to decide what policies will be needed to make London surge again. The challenges facing the capital though are not insignificant and solutions are not obvious either. What are the policies needed for London to thrive once more…


The data referenced above has been sourced from Vacancy Analytics, a cutting-edge Business Intelligence tool that tracks recruitment industry trends and identifies emerging hotspots. With 17 years of experience, we have a deep understanding of market activities in the UK and globally.

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