2020 has been a year that most businesspeople in Hull will want to forget. While January was filled with New Year optimism fuelled by an end to the political uncertainty in Westminster and an end to Brexit (ho, ho, ho!), no sooner had things got going than COVID-19 came along and ruined everything. Sickness, lockdowns, a loss of custom, supply issues and an evaporation of confidence saw the local economy swing from boom to gloom in a matter of weeks. Happily, since the end of lockdown things have improved considerably and the Hull & Humber Chamber of Commerce reports states that in Q3 the region returned to growth as businesses adapted to the ‘new normal’.
This speedy return to growth and the increasingly positive business sentiment that has accompanied it, are indicative of the region’s underlying economic strength. But what does 2021 have in store for us? In this latest blog from Coversure Hull, Hull’s leading independent insurance brokers, founder and local entrepreneur Andy Price considers what may lay ahead and sees not just challenges but opportunities galore.
What Brexit Means For Hull
Brexit is finally happening. In a few days time we’ll enter 2021 and our four-decade long relationship with the EU will be over. For reasons that date back to the 1970s – including the Cod Wars and the effective ending of Hull’s role as a long-distance fishing port – Hull has been Eurosceptic and in 2016 66% of people voted Leave.
While we officially left in January, thanks to the transition period not much has changed. Come the 1st of January 2021, however, that transition period will end and we’ll be out for good or ill. The mood music at the negotiations over the past couple of weeks has been grim. Significant differences remain in areas including fishing rights, government support for business and conflict resolution. Now while EU talks traditionally do go down to the wire, these seem to intent on bending that wire to breaking point. And while both sides say no deal isn’t what they want, the smart money is on that outcome at present.
So, what does our ending our free trade agreement with our largest trading partner and moving to World Trade Organisation’ (WTO) rules mean for business? It means uncertainty in the short-term and a shock to UK PLC as a whole. Moving to WTO’ rules means tariffs on goods, customs checks and a likely rise in fuel costs as Sterling falls. None of this is welcome and while new trade deals will be done – Japan’s and Singapore’s are now in place – making up the shortfall in the short-term will be challenging.
Looking away from the national picture and back to Hull, a no deal scenario could prove more mixed. While Kent braces itself to become a permanent lorry park as Operation Stack becomes a county-wide part of the new normal, ports like Hull could be in for boom times. ABP have invested millions in the Port over the past decade and it can now handle bigger vessels thanks to the container facility. If, as many suspect, shippers and hauliers look to alternatives to the southern ports so Hull could become a major player. This could be boosted further if Hull becomes a ‘free port’ – somewhere where tax and duty can be deferred on goods. Boris Johnson has spoken enthusiastically of these in the past and Hull’s name has been mentioned as a potential candidate for free port status.
A by-product of an expanding port would be a potential boost to local hauliers. Humberside, for obvious reasons, has traditionally had a big haulage sector and more ships coming in and out means for lorries and more business. Since the port’s renaissance we’ve seen a steady rise in the number of requests for truck insurance quotes so it’s something we’d obviously welcome.
Time will tell with Brexit and Hull. In the short-term there may well be pain, but as the 66% who voted Leave clearly believe, there could be long-term gain.
The electric vehicle revolution is now in full swing and its now moving into the commercial vehicle sector – electric commercial vehicles (eCVs). Various reports have stated that the EV market will reach nearly 27m vehicles by 2030 with the fastest growing sector being eCV – we’ve certainly seen our first requests for electric commercial vehicle insurance quotes and demand is definitely on the rise. Given Hull’s notoriously poor air quality, an unfortunate downside of a thriving port, agriculture and haulage sector, this is good news for all.
eCVs are becoming more common sights, and the revolution will only gather pace as the push for clean air and lower costs continues. The 2020 Budget provided fresh grants for eCVs as part of a £532m plan to electrify Britain’s roads. Big firms including Royal Mail, Amazon and DHL have all pledged themselves to a zero emissions future and this will drive this revolution further and faster. With lower running costs, cheaper repairs, greater reliability and a cost per mile of around 2p (versus 12p for a diesel) the eCV surge could prove good news for SMEs who are looking to cut costs. All we need is the government to provide sufficient charging infrastructure to make this happen.
In the case of heavier vehicles such as those used in agriculture and haulage, here too EVs are making in-roads. Following on from Daimler and Tesla, new players have entered the electric truck market. Paneltex, Magtec and DAF all have models on the market and firms like John Deere now offer electric farm and plant equipment. There’s even talk of electrifying our motorways using train-style overhead gantries for electric trucks as they have on the Continent. Hull already has ambitious plans to become an electric vehicle city so this is one area we can expect to see real progress in, in 2021.
Of course, in the case of haulage and trucking, the elephant in the room remains Brexit. There’s a shortage of around 100,000 HGV drivers in the UK and with 60,000 EU drivers in the sector, manpower could prove a substantial problem. Some industries watchers have pointed to driverless trucks as the solution, but while the UK has been testing these for some years and companies like Tesla are investing billions into the technology, it’s not going to help a Hull haulier next year.
Hull Property Market
Hull has been a property hot spot for a number of years now, and while the first six months saw some of the heat go out of the market it’s looking like it will finish the year ahead and carry momentum into 2021. Rightmove’s figures show that the average cost of a home is now £145,988 – 4% higher than the previous peak in 2017. Landlords have also had a decent year with average rents up by 1.5%. An influx of young people looking to work in Hull’s booming digital economy and a post-COVID exodus of people from the south have fuelled the already heated market. In 2021 I think we can expect to see more of the same, especially given the stamp duty freeze and the underlying shortage in housing and affordable properties.
One area where the outlook is less rosy is that of commercial property. The rush of people working from home and the rising tide of retail failures has left commercial landlords with empty properties. While there’s plenty of talk of these buildings being repurposed for residential use, it’s likely that many will fall empty for a period of time and owners would be wise to take out unoccupied property insurance.
Hull’s Digital Economy
If you’d have told me in 2005 that one day Hull would have a digital and creative economy worth £7bn, I’d have laughed. Hull does shipping, haulage, agriculture and construction, not hi-tech online cleverness. Well, it seems Hull does both. Invest Humber figures show that the city has become a digital centre of excellence. With the likes of KCOM investing £60m in fibre and 5G being trialled , the ambition of Hull becoming a smart city look likely to come to fruition.
In this area the crisis of 2020 may have actually helped matters. By demonstrating to businesses that they can work effectively remotely using digital channels has forced the pace of digital transformation. In 2021 I expect to see more innovations coming from the city and our reputation for being a world leader in these technologies grow.
What Does 2021 Hold For Hull’s Businesses?
As the above shows, its looking like Hull is in for another busy year. Whatever the outcome of the Brexit negotiations, things will change and there may be some challenges to overcome, but overcome them we shall. From a personal perspective, the advent of EVs becoming mainstream for those looking for fleet insurance will be interesting, as will seeing how quickly eCVs take off and whether we’ll start getting electric commercial vehicle insurance requests coming in. Overall, I think we can all look forward to a year that’s far more stable than the one we’ve just lived through and that by the time I come to write this blog next year, it will be looking back on a better year for Hull.
Founder Coversure Hull Group
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