![\"Voters](\"https:\/\/www.europesays.com\/britain\/wp-content\/uploads\/2026\/05\/london-voting.jpg\")
\t\tLocal elections are set to be a “significant” event for markets. \t<\/p>\n\t\t\tThursday 07 May 2026 12:00 pm\n\t\t\t<\/p>\n
\t\tLocal elections are set to be a “significant” event for markets. \t<\/p>\n
The result of the forthcoming local elections could trigger a further slump in housebuilding in the capital as a shake-up in council composition obstructs development plans.<\/p>\n
Voters head to the polls in every London borough today, with polling suggesting Labour is on course to shed dozens of seats and lose its grip on the capital, which has for decades returned a host of Labour-run councils.<\/p>\n
That could precipitate a surge in local authorities with no overall control, making it harder for developers to get planning consent for major construction projects, according to Tony Travers, professor in practice at the London School of Economics department of government.<\/p>\n
\u201cI think we\u2019ll see a big tilt towards it being more difficult to make difficult decisions about planning and development which is profoundly important for business and the economy,\u201d Travers said.<\/p>\n
\u201cAll the polling we\u2019ve seen points to more councils not being controlled by one party with a majority. The last time this happened was 2006, when there were eight councils in London with no overall control.<\/p>\n
\u201cThe number will be higher this time, almost certainly. What that means is it\u2019s harder to form a majority administration, and coalitions are going to be harder to form than in the past.<\/p>\n
\u201cThat in turn means it\u2019s harder to make difficult decisions and particularly, very importantly for business, a risk that anti-development voices become louder because it\u2019s easy to win popular votes by opposing development, much less easy to win them by being pro big new buildings and loss of housing. So this has a profound potential implication.\u201d<\/p>\n
Travers suggested that a surge in councils with no overall control would increase the chance that London mayor Sadiq Khan or housing secretary Steve Reed will intervene in the capital to overrule local planning decisions if boroughs become less prone to making pro-growth planning decisions.<\/p>\n
\u201cIt may look as if the labour government is taking on councils where there is a substantial body of Greens or a substantial body of Reform,\u201d he said.<\/p>\n
\t\t\t\t\tRead more<\/p>\n
\t\t\t\u2018Entirely avoidable\u2019: Build-to-rent housebuilding slows as London planning wait doubles<\/a><\/p>\n \tConstruction grinds to a halt<\/p>\n Fears of a further slowdown in construction in the capital come after just 4,170 new homes began construction in London<\/a> in the last financial year, a 72 per cent fall from the previous financial year and the lowest rate of housing starts in decades.<\/p>\n Emma Revell, external affairs director at the Centre for Policy Studies, said: \u201cWhen housing is unaffordable in the capital, businesses struggle to hire workers who live close enough to come into the office without bookending each day with an arduous commute. If businesses can\u2019t expand, the wider economy suffers.<\/p>\n \u201cWhen parents \u2013 or wannabe parents \u2013 can\u2019t afford to get on the housing ladder until their mid-30s or can\u2019t afford that two- or three-bed until even later, they won\u2019t have as many children as they may otherwise have wanted to, or even any kids at all. The impact of a declining birth rate will be felt for decades to come, first through school closures \u2013 which we\u2019ve already started to see in some London boroughs \u2013 and then through fewer workers, meaning fewer taxpayers.\u201d<\/p>\n The UK\u2019s construction sector suffered a sharp fall in activity last month<\/a>, as the Iran war batters confidence and drives up prices.<\/p>\n S&P Global\u2019s monthly construction index dropped to 39.7 in April, down from 45.6 in March.<\/p>\n Builders are beginning to suffer from rising material costs caused by the blockage to the Strait of Hormuz, as housebuilding slow<\/a>s landbuying and demand for homes weakens<\/a>.<\/p>\n Civil engineering activity suffered the biggest drop in April, down to 35.5, followed by housebuilding, which fell to 38.2.<\/p>\n Construction firms widely reported falling demand and a lack of new work to replace the projects that were completed in April, according to S&P.<\/p>\n \t\t\t\t\tRead more<\/p>\n