Issue 255 | 16 November 2020 - Turner & Townsend alinea

Economic Week In Review | Issue 255 | 16 November 2020

Construction and property news

Britain’s biggest road tunnel | Highways England started the tendering process for its largest contract, the £2bn Lower Thames Crossing road tunnel. Work is expected to start in mid-2022.
Stonehenge tunnel | The Transport Secretary has approved £1.7bn plans to bore a two-mile tunnel despite local criticism and the recommendations of planning officials.
Mini nuclear plants | A Rolls-Royce led consortium has announced plans for 16 small modular reactors across the UK. Rolls-Royce say that the plans will help create low-carbon electricity and the concept could be exported.
Carillion | The UK’s financial regulator has found that it will not impose financial penalties on the former directors of Carillion, instead proposing “public censure”. The FCA found that there were a series of breaches of financial rules before the business failed, such as “giving false or misleading signals as to the value of its shares”.

Shipping

Port warning | Following on from warnings in October, Felixstowe Port is said to be in ‘chaos’ with Christmas and Brexit on the horizon. One ship was reportedly unable to unload at the port last week and was redirected to Rotterdam because of delays. The port company blamed “the Covid pandemic, high levels of import traffic, the large number of empty containers and a large amount of unusually long-stay containers held at the port”.
Container crunch | Shipping containers are considered a “hot commodity” as Chinese exports have surged and several pinch points have developed along key routes, leading to an acute shortage of containers.

Materials, stocks, and currencies

Vaccine relief | Markets were buoyed by Pfizer’s announcement that early data showed its vaccine was 90% effective at preventing Covid-19 infections. However further testing is needed and infrastructure needs to be developed as the vaccine is stored at -70 degrees Celsius.

UK news

GDP | The UK economy grew at a record rate of 15.5% in Q3, however, just 1.1% was in September suggesting that the rate of recovery is decelerating.
Debt crisis | Debt charity Stepchange has warned that Britain is “sleepwalking into a debt crisis”. The number of people in severe debt has doubled since March to 1.2 million, household borrowing has increased 66% since May, and 7.1 million people have fallen behind on utility / council tax payment.
Employment | According to the latest data from ONS shows that employment figures for people born outside of the UK has fallen. Whilst UK employment of the original EU14 group seems fairly stable, large falls were seen in employment from Eastern Europe.

Global news

Mega trade deal | The Association of Southeast Asian Nations (Asean), along with China, Japan, South Korea, Australia and New Zealand have signed the world’s biggest trade deal. Its members account for nearly a third of the global population and 29% of global GDP. The Regional Comprehensive Economic Partnership (RCEP) is expected to eliminate a range of tariffs and has taken nearly a decade to organise.
• Japan | Japan’s economy bounced back with 5% growth in Q3. Analysts now expect a “modest” recovery this year.

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	6,316.39	6.88	-13.51
FTSE 250	19,270.00	7.55	-5.89
Nikkei	25,385.87	4.36	5.94
CSI 300	4,856.85	-0.59	25.27
S&P 500	3,585.15	2.16	14.89
Nasdaq	11,823.29	-0.55	38.50
CAC 40	5,380.16	8.45	-9.41
Dax	13,076.72	4.78	1.25
$ per £	1.3175	0.10	2.13
€ per £	1.1143	0.62	-4.60
Gold £/oz	1,430.55	-3.57	25.73
Brent Oil $/barrel	42.78	8.44	-32.42

Weekly Summary

The week was buoyed by positive news about a vaccine for Covid from Pfizer, however, more tests and infrastructure are needed before they can be distributed. That said, for many it shines a light on a path out of cycles of constrained activity.

It was encouraging to see several large infrastructure schemes announced this week. As pipelines become less secure, many will no doubt be looking at longer term infrastructure work to bolster their order books, but as ever, we must look for signs of how certain these projects are, especially in light of increasing government debt.

It is concerning that with only a few weeks until Brexit, news that shipping has become more difficult, expensive and prone to delays. As the EU and the UK approach the deadline by which a deal is feasible, we should all make sure we understand where project deliveries are coming from and if there are any possible impacts.