The firm, which bought the land in 2018, has been planning to construct hundreds of apartments, but no buildings have gone up and now the developer faces a cash crunch. Meanwhile, new home sales in the UK capital have collapsed to an 11-year low as surging interest rates and a cost-of-living crisis damp demand. On a recent Wednesday, access to the site was closed with few signs of building work.
“The impact of higher interest rates is only beginning to permeate through the economy,” said Niraj Shah, an economist at Bloomberg Economics. “Elevated borrowing costs will lead more households and businesses to adjust their spending — denting overall demand in the economy.” Almost 440,000 firms were already in “significant distress” in the second quarter, an increase of 8.5% from a year ago, according to consultancy Begbies Traynor Group.
Back in east London, signs promising luxury homes “setting a new standard in riverside living” at the Country Garden site have been defaced with graffiti. In the UK, signs of weakness are also emerging in the services sector, the biggest part of the economy, as consumers cut back on spending on non-essentials.
While UK unemployment remains low, it has started to creep up. If that were to continue, it would add to the problems for Prime Minister Rishi Sunak in the run up to an election due by early 2025. The Recruitment and Employment Confederation said that growth in demand for staff weakened at the start of this quarter.