Trump’s Policies and UK Economic Slowdown
The US presidential administration under Donald Trump exerted considerable influence on the global economy, and the United Kingdom was not immune to its effects. Specifically, periods of geopolitical instability initiated by the US administration correlated with slowdowns in UK economic activity, particularly within the property sector. This article examines the interplay between US policy decisions and the UK’s economic performance, focusing on the property market as a key indicator.
Impact on the UK Property Sector
Data from Glenigan indicated a significant decline in the value of new projects in the UK during the three months ending February 2025, with a drop exceeding one-third.1 Major works, defined as projects valued over £100 million, experienced the most substantial downturn. This shift occurred after a period of optimism in November 2024, when Rachel Reeves’s budget announcement initially spurred developer confidence and increased major project activity. However, subsequent actions by the US administration reversed this trend.
The slowdown affected various segments of the construction industry, including office building, civil engineering projects, and residential housing. This broad impact highlights the interconnectedness of the UK economy with global events and the sensitivity of the property sector to international affairs.
Geopolitical Instability and Economic Volatility
Several events originating from US policy contributed to the increased volatility. In January 2025, Donald Trump’s comments regarding Greenland raised concerns about potential conflicts in Europe.1 February 2025 saw the US Supreme Court rule Trump’s tariffs illegal, only for the president to subsequently impose new import charges, circumventing the court’s decision.1 The escalating tensions with Iran further exacerbated the situation, creating a climate of uncertainty that dampened investment and economic activity.
Allan Wilen, Economics Director at Glenigan, described the situation as “deeply worrying,” noting that market volatility led to erratic price fluctuations dictated by international affairs.1 He indicated that the decline in construction activity had deepened, casting doubt on hopes for a recovery in the latter half of the year.
Challenges for UK Economic Policy
The economic slowdown presented a double dilemma for policymakers. The immediate concern was the loss of tax revenue due to stalled projects. The longer-term challenge centered on the housing sector and its over-reliance on the private sector for development. Developers began to leverage the instability to negotiate concessions from public authorities, including reductions in the number of affordable homes incorporated into new projects.
For example, British Land engaged in a dispute with Southwark council regarding a tower development, seeking to increase its height while reducing the proportion of affordable apartments from 35% to 3%.1 London Mayor Sadiq Khan was slated to adjudicate the dispute. This case exemplified a broader trend of developers seeking to prioritize profitability over social housing commitments.
The Need for Public Sector Involvement
The situation underscored the need for greater public sector involvement in housing development. The article suggests a model similar to that of the Netherlands, where councils and mayors act as commissioners for all new schemes, with building firms serving as contractors. This approach could ensure that housing projects align with public needs and priorities, rather than being solely driven by private sector interests.
Looking Ahead
Given the expectation of continued geopolitical instability and the potential for prolonged disruption, the article emphasizes the importance of greater self-sufficiency in the UK housing market. Relying solely on the private sector, it argues, will likely result in a failure to meet housing targets and deliver the amenities, workspaces, and landscapes the country deserves.1