The road ahead

Economic Week In Review | Issue 248 | 28 September 2020

UK news

  • Circuit-breaker | Capital Economics forecasts that a “circuit-breaking” two-week lockdown could hit GDP hard, pushing full economic recovery back to 2023, a year later than if there were to be no more restrictions.
  • Services | The latest Markit/ CIPS UK Services PMI stumbled in September to 55.1, down from 58.8. Whilst still showing growth, it implies a slower rate of growth and is thought to be caused by the Eat Out to Help Out scheme ending.
  • Winter Economy Plan | The Chancellor announced a replacement for the Coronavirus Jobs Retention Scheme. Under new plans, an employee can work a minimum of 33% of their hours and be paid by their employer for these hours. Of the remaining hours, 33% will be paid by the employer, 33% by the government and 33% will be unpaid. A key question will be whether employers are certain enough about future workload to warrant paying staff for unworked hours in order to retain them.
  • 2020 Budget | The Chancellor announced that this year’s Budget will be cancelled, raising questions over the already delayed Spending Review.

 

Materials, stocks, and currencies

  • Iron ore | Prices have rallied in recent months but are considered precarious given the market’s reliance on China’s steelmaking industry. Prices have surged to their highest in more than six years following supply disruptions and strong demand in China.

Construction and property news

  • High end housing | Sales of homes costing over £1m have doubled in the last month, with the number of agreed sales 105% higher than a year earlier, outperforming the rest of the market. Demand is being supported by tax reductions, changing lifestyles post-lockdown, and restricted transactions earlier in the year. Norfolk, Wiltshire, and Cornwall saw the largest sales increases.
  • Dust Dangers | The HSE will launch a one-month inspection blitz on Monday 5th October with a particular focus on respiratory risk, and occupational lung disease in construction. More than 3,500 building workers die each year from work-related cancer, with thousands more cases of ill-health and working days lost. Inspectors will check on measures to protect workers from asbestos, silica and wood dust. Covid-secure measures will be checked too.
  • Manchester permissions | A historic planning committee meeting granted permission for £1bn of projects across the city. Schemes include co-living schemes, and a 23,500 capacity arena.
  • Regis | The shared office provider is currently in talks with landlords, saying it will dissolve 500 leases unless a rent cut is achieved.
  • Shopping centres | Unibail-Rodamco-Westfield, Europe’s major shopping centre and office operator, is to raise €3.5bn in capital and sell €4bn of assets to pay off debts. Shopping footfall has generally recovered on the continent but the “ripple effects of Covid-19 extend further than lockdowns” according to chief executive Cristophe Cuviller.
  • London offices | In a move thought to signal expectations of a recovery in demand for office space in central London, KKR has become fifth-largest shareholder in Great Portland Estates.

Brexit

  • Banking moves | JP Morgan moved €200bn of assets from London to Frankfurt, making it one of the largest banks in Frankfurt. The bank also moved 200 staff from London to European offices.
  • Truck parks | The government has warned that queues of 7,000 trucks in Kent are a “reasonable worst case” scenario and that police will patrol Kent to fine truckers entering Kent without the right paperwork, with some dubbing the new arrangements as a Kent Border. Recently a Covid-19 testing centre was removed to make way for a lorry park.
  • Retail impact | The British Retail Consortium has warned that tariffs could add £3.1bn to the cost of food and drink, with some stating that it would be “worse than Covid” as a lack of clarity on new processes is hindering preparedness.
Tender Price Index

Published every six months, our Tender Price Index is an analysis of inflation price deviation in construction prices. Click on the link above to view our most recent Index.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 5,841.67 -2.74 -21.32
FTSE 250 17,044.12 -2.99 -14.66
Nikkei 23,204.62 -0.67 6.06
CSI 300 4,570.05 -3.53 18.62
S&P 500 3,298.46 -0.63 11.37
Nasdaq 10,913.56 1.11 37.46
CAC 40 4,729.66 -4.99 16.45
Dax 12,469.20 -4.93 0.71
$ per £ 1.2705 -1.89 3.18
€ per £ 1.0934 0.13 -2.82
Gold £/oz 1,460.49 -3.27 19.92
Brent Oil $/barrel 41.92 -2.85 -32.29

Weekly Summary

With new restrictions coming into force and significant proportions of the UK under local lockdowns, concerns are increasing over the risk of economic scars as enduring uncertainty encourages different, more protective economic behaviours.

Investors and stockmarkets reacted poorly to the news of increasing cases, and the new restrictions, however, it has led to some investors seeking opportunities in the market and buying undervalued shares.

The Week Ahead

Brexit talks will continue this week with a month remaining until the “realistic deadline” for a deal, according to Michel Barnier, as it would need to be ratified by the EU before 1st January. David Frost, the UK’s chief negotiator claims that a deal is “very much possible, but equally very far from certain” but that the recent two weeks of informal discussions have been “relatively positive”.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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