Issue 264 25 January 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 264 25 January 2021

Property and construction news

Rail Investment | The Government has released £760m to fund the construction of the next stage of the East-West Rail line between Oxford and Cambridge. Funding of £34m has also been confirmed to progress plans to reopen the Northumberland line between Newcastle-upon-Tyne and Ashington.
House prices in London have reached a new record average of over £500,000.
Output | The construction industry is expected to grow by 14% this year, and 4.9% in 2022, following a 14.3% fall in 2020 according to the Construction Products Association.
Hospitality | 9,930 licensed premises closed in 2020, an overall decline of 5.1% in Britain. Casual dining was the worst hit, with a 9.7% fall in numbers. In 2019 8,658 premises shut.

Materials, stocks, and currencies

Oil | US President Joe Biden has halted all new oil leasing and drilling permits on federal lands and waters for 60 days. However, over the last few months, companies have stockpiled permits – in the last year, the Trump administration approved more than 4,700 permits, similar volumes were seen when oil breached $100/barrel.
Sterling | The pound rose to a three-year high against the dollar, buoyed by a vaccine roll-out which is swifter than other large economies. It also hit an eight-month high against the euro.
Copper prices fell at the end of the week following concerns over new Covid cases in China ahead of the Chinese new year.

UK news

Debt | UK borrowing was £34.1bn last month, the highest recorded for a December, and the third-highest figure in any month. Total borrowing for the year now stands at £270.8bn. The Office for Budget Responsibility warned that it could reach £393.5bn by March.
Covid-loans | UK companies have taken out nearly £70bn of state-backed loans throughout the pandemic and more than three-quarters of small firms have some sort of loan (an increase from 50% pre-Covid), and 40% of those say that the burden is unmanageable.
Consumer spending | Data from the Bank of England showed a large fall in aggregate spending in the UK. Debit and credit card purchases were 35% below their February 2020 average.
Consumer inflation increased to 0.6% in December (from 0.3%), as shoppers returned to the high street after November’s lockdown.
Nissan | After issuing warnings last year that a no-deal Brexit would see them leave the UK, Nissan has committed to moving additional battery production near to its Sunderland plant. Previously, batteries were imported from Japan but moving production to the UK will mean that its cars comply with trade rules of origin.
Brexit delays | Research from the Chartered Institute of Procurement and Supply revealed that 60% of firms importing goods from the EU into the UK have reported delays under the new relationship, in addition to those caused by Covid-19. Some firms have reported that there is little appetite from EU hauliers to bring goods into the UK.

Global news

Eurozone economy | Economic activity in the Eurozone fell further below the 50.0 mark, to 47.5 in January, according to IHS Markit’s flash index. The bloc is expected to return to its pre-Covid level within two years, assuming the vaccine roll-out allows normality to resume.

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	6,695.07	-0.60	-11.74
FTSE 250	20,596.91	-0.09	-6.14
Nikkei	28,631.45	0.39	20.16
CSI 300	5,569.78	2.05	39.11
S&P 500	3,841.47	1.94	16.57
Nasdaq	13,563.06	4.19	45.39
CAC 40	5,559.57	-0.93	-7.71
Dax	13,873.97	0.63	2.19
$ per £	1.3683	0.61	4.70
€ per £	1.1235	0.09	-5.22
Gold £/oz	1,355.96	0.76	12.79
Brent Oil $/barrel	55.41	0.56	-8.70

Weekly Summary

Debt, confidence, and delays were the focus of the week, which will begin to raise questions over the UK’s recovery from Covid-19.

Company and national debt have increased dramatically over the last ten months, and these record levels will need to be repaid in time. Many will be looking to the Budget in March for guidance on how and when his repayment will take place.

Yet, consumers don’t appear to be taking on more debt, possibly as a sign of low confidence in future income as well as the inability to gain debt on large purchases such as holidays. Consumer spending accounts for a large proportion of the UK economy, meaning that there could be later impacts of lower levels of spending.

As we ease into our new relationship with the EU, companies are navigating new rules and administrative burdens, not least of all finding out the impact of rules of origin and being subject to charges or delays. However, in the current climate, it is inevitable that some of the delays seen in various sectors can be attributed to the impact of Covid-19.