Economic Week In Review | Issue 311 | 10 January 2022

Materials and commodities

• Supplies | The latest material availability update from the CLC reported that a seasonal drop in demand took the pressure off supply chains, but warned that pressure could return this year alongside demand and lead times could increase.
• Manufacturing | IHS Markit/CIPS’ PMI showed that growth in UK factory output was limited last month because of Covid-restrictions and Brexit disruptions.
• UK Steel | New tariff arrangements between the US and EU came into force on 1st January, but steel from the UK is still subject to a 25% tariff as it is no longer covered by trade agreements made by the EU.

UK construction and property news

• City approvals | The City of London approved 70% more floorspace in 2021 than in 2020, with Andrew Moss, Chair of the Committee stating that it shows continuing confidence in the City of London as the place to build world-leading offices.
• PMI | The latest survey recorded UK construction PMI at 54.3 in December, a slight fall from November’s reading but still ahead of the 50.0 marker for no change. The report comments that “ An improved alignment between demand and supply helped to soften inflationary pressures at the end of 2021”
• BIM take up | 70% of UK construction professionals are using BIM according to a survey by NBS. 70% of those surveyed said that they need BIM to make the golden thread required by the upcoming building safety legislation a reality, but only 51% are clear how they will do this.
• Investment | Colliers expects that this year will see investment hit a five-year high of £65bn into commercial real estate, boosted by pent-up demand, availability of supply, and overseas investors.
• Cladding | Michael Gove, the minister for housing, has written to firms setting a March deadline for them to agree a plan to protect leaseholders living in homes between 11-18m high with unsafe cladding. Buildings within this range are ineligible for government support.
• Reverse charge VAT continues to cause cashflow problems for specialist contractors with several contacting both press and MPs stating that the “ideas and process are flawed to the extreme”.
• CITB | Following a six-month inquiry, a cross-party House of Lords committee has criticised the CITB’s track record saying it should be improved or replaced.

UK economy

• 1984 revisited | Car production in November reached lows not seen since 1984 as supply chain issues plagued the industry.
• New customs | The beginning of the year marked the start of full EU customs checks. Last year, British importers of goods from Europe could delay the submission of their customs declaration for six months, but these must now be submitted at the border. Hauliers have warned that issues with the Goods Vehicle Movement Service will cause delays. Checks on plants and animals have been delayed until later in the year.
• HGVs | The government has released £34.5m funding contracts to train new lorry drivers, creating “skills bootcamps”. Driver numbers have fallen 25% since 2019. Training costs £4,000 per driver and industry analysts warn that “wafer thin margins” have acted as a deterrent for companies to train the drivers they need.

Global economy

• Japan | A record low number of people turned 20 in Japan last year, increasing concerns over its falling population and workforce size. The number of Japanese people aged 20 on 1st January 2022 was 40,000 lower than the 1.2m recorded at the start of 2021.
• US prices | A poll of economists by FactSet expects US CPI to increase by a further 0.5% when figures are announced on Wednesday, which would mean inflation of 7.1% on an annual basis. However, some analysts suggest that inflation looks close to peaking.
• Evergrande | The Chinese property developer has been ordered to demolish 39 buildings on a man-made island. Authorities in Hunan province have said that permission to build was never given. Trading of Evergrande’s shares was suspended ahead of the announcement.