Issue 269 March 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 269 March 2021

Property and construction news

Infrastructure bank | This week’s Budget is expected to give details on the Infrastructure Bank which was announced in last year’s Spending Review. The Treasury has announced an initial £12bn in capital investment, as well as £10bn in loan guarantees to help generate private investment.
London lane rental | The scheme aimed at reducing disruption from roadworks by charging a daily fee for digging up road sections will be expanded to include pavements and more roads from May.
Output | The Federation of Master Builders warned that two in three builders’ workloads have declined or stagnated, and 82% reported material price increases but only 29% of builders have increased the price of their work, down from 37% in Q3.
Reverse charge VAT comes into force today, reducing cashflow through the industry as rather than VAT being paid along the supply chain, the recipient of the supplies now accounts for the VAT.

Construction labour

Wages | Data from the ONS showed that average construction wages grew in December, showing an annual increase of 4.6%, but data collected by Construction Enquirer shows that the national average weekly pay fell in the 12 months to January.
Self-employment | According to Hudson Contract, the industry’s largest payer of subcontractors, the number of self-employed workers has fallen 13% compared to pre-Covid levels, this corresponds to the ONS figures released last week.
Skills | Plans to introduce a new grade of electrical operative at Hinkley Point C have been put on hold after complaints from Unite, and several demonstrations. Unite said that plans for “Electrical Support Operatives” would undermine the role of the electrician.
Workforce | ONS data showed that the construction workforce has fallen by 169,000 since the start of the pandemic. Perhaps more worryingly, it has been steadily falling since late 2018 and has yet to recover to its peak 2008 level.

Materials, stocks, and currencies

Copper | The International Copper Study Group released a report saying that the copper market shows an apparent deficit, citing strong demand in China as a key reason. China imports 55% of the world’s copper and has increased demand at a time when inventory levels are low and production in Peru, a top producer, has fallen.

UK news

Tax | Concerns have been raised over possible plans to increase corporation taxes from 19% to 24% in this week’s Budget.
Foreign-born workers | The latest data from the ONS shows that the number of non-UK-born workers in the UK fell by 1.5 million. The number of EU-born workers fell by nearly 1 million, or 10%.

Global news

Zombies | The EU’s top antitrust official has warned that Covid-19 bailouts have kept “zombie” companies alive and that the rate of bankruptcies in 2020 is lower than any year before. State aid rules were relaxed during the pandemic as normal business activity stopped.
Shipping containers | Exporters in China have been affected by the global shortage of shipping containers and according to some suppliers, the cost of sending a 40ft container from China to the US has quadrupled in the last year. Logistics firms are trying to source new containers but the increased cost of steel for the manufacture of new containers has pushed costs to the highest level on record.

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	6,483.43	-2.12	-1.48
FTSE 250	20,910.37	-0.60	8.17
Nikkei	28,966.01	-3.50	37.00
CSI 300	5,336.76	-7.65	35.45
S&P 500	3,811.15	-2.45	29.01
Nasdaq	13,192.35	-4.92	53.98
CAC 40	5,703.22	-1.22	7.41
Dax	13,786.29	-1.48	15.95
$ per £	1.3948	-0.53	9.16
€ per £	1.1529	-0.21	-0.70
Gold £/oz	1,245.92	-2.19	0.68
Brent Oil $/barrel	66.13	5.12	30.90

Weekly Summary

The week was a bumper week for information on the construction labour market. Data shows that there are pressures within the market with a smaller workforce and some wage increases, but this seems to be dampened by lower output levels. If the UK manages to follow the roadmap out of lockdown and confidence is restored to the market, causing output to increase, we could see these pressures increasing.

To lookout for this week

The Budget on Wednesday will outline ongoing support from government, as well as any attempts to repay the ballooning deficit. All eyes will be on Rishi Sunak’s changes to taxes and government spending programmes.