Economic Week In Review | Issue 319 | 7 March 2022

Materials, markets and currencies

• Oil prices reached a thirteen-year high of more than $139/barrel before settling back to $130 as the US discussed a potential ban on Russian supplies.
• Germany | Germany’s stock market has fallen nearly 20% since the beginning of the year putting it in bear market territory.

Retail

• Russia | A number of high street and luxury retailers have halted operations in Russia.
• Amazon is to close its physical stores as it looks to expand its grocery offering.
• Retail prices rose at their fastest pace since November 2011 with food inflation at its highest rate since September 2013.
• Online shopping | Research from Ve Global reveals that 43% of shoppers abandon their online baskets and divert to Amazon. Other retailers are increasingly becoming a stepping stone to Amazon.
• Demand for new shops in central London has increased according to Colliers. 101,000 sqft of retail space in the West End is currently being refurbished or redeveloped, three times the level of December 2019 and 49% up on the five-year average.

UK construction and property news

• Red diesel | Industry groups are campaigning for the Chancellor to extend the red diesel rebate which is due to come to an end for construction equipment at the beginning of April. Fuel prices have increased rapidly since Russia’s invasion of Ukraine and the rebate removal will see the price of fuel (for some uses) increase by a further 58p/litre
• PMI | The latest survey by IHS Markit for its UK construction PMI showed a headline figure of 59.1, up from 56.3 in January. It is the steepest increase for eight months and the 13th month above the 50.0 marker. Respondees warned of falling confidence and rates of input price pressure, but also new order growth.
• Industrial space in the south east could “dry up” according to a study by London First and CBRE as vacancy rates have fallen from 6.2% to 1.8% in the last year.
• PFI | Over the next five years, 72 PFI contracts are coming to an end in England and £3.9bn of assets will revert to public sector ownership. Over the next 10 years, it increases to 200 PFI projects with assets amounting to £12bn. A report by the National Audit Office in 2020 found that public sector bodies underestimate the time, resources and complexity involved in negotiating the end of these contracts.

UK economy and net zero carbon

• Energy | UK-based JET Laboratory broke its own world record for the amount of energy produced through nuclear fusion, producing 59 megajoules over five seconds (enough to boil 60 kettles of water). Whilst it’s still relatively small, it moves the energy market closer to fusion power, away from a reliance on fossil fuels.
• ULEZ| The Ultra Low Emission Zone will be expanded to cover all of Greater London by the end of next year. The current cost is £12.50 per day.

Global news

• World trade | The Kiel Indicator of world trade showed a significant drop in the volume with negative signs for all economies, with overall trade falling -5.6%.

Global news