Economic Week In Review | Issue 337 | 11 July 2022

Materials and commodities

• Iron Ore | Miner BHP is to face a £5bn lawsuit brought by 202,600 Brazilian claimants resulting from the collapse of a dam in 2015. The lawsuit will be one of the biggest cases by value in the English courts.
• Energy | The UK’s energy price cap is set to reach a record £3,363.70/year in the first quarter of 2023, according to analysis from Cornwall Insight Ltd. The price cap currently £1,971 for customers paying by direct debit.
• Refinery margins | The Competition and Markets Authority will launch an in-depth investigation into the fuel sector after concerns have been raised over profit levels at refineries because of the growing gap because of the input price of oil and the wholesale price once it leaves the refinery. The AA’s head of road policy suggests that gap isn’t the issue, but the length of time it takes for wholesale prices to reach the forecourt.
• Gas | Russian provider, Gazprom, has cut its supplies by a further third, having already cut it by half since mid June. It comes as Italy is suffering an intense drought and heatwave that are increasing energy usage.

UK construction and property

• Output fell in June according to the Purchasing Managers’ Index, which slumped to 52.6 from 56.4 in May driven by concerns over the war in Ukraine. The residential sector was the most affected, falling to 49.3, contracting for the first time since May 2020.
• Cashflow | Equals Money has warned that one in five manufacturing and construction companies in the UK are concerned they will not survive the current economic turbulence. Almost 90% of business leaders reported cashflow issues stemming from supply chain issues, energy prices, interest rates, and late payments.
• Rental homes | In order to meet the Decent Homes Standard, just under a quarter of privately rented homes in the UK need an upgrade, according to the Department for Levelling Up, Housing and Communities.
• Infrastructure | The decision on the planning application for Sizewell C nuclear plant has been delayed again with a new deadline of 20th July.
• Wind expansion | £54bn will need to be invested in new power grid infrastructure to deliver the government’s targeted wind generation capacity of 50GW by 2030.

UK economy

• Investment | L&G’s chief has warned that the overhaul of Solvency II rules need to be carefully thought through as the UK could risk losing investment to the US.
• Embedding inflation | The June Institute of Directors’ survey shows that companies are planning to raise prices, a move which will embed high levels of inflation into the economy.

Global economy

• US | The American economy added 372,000 jobs in June with many talking about a “red-hot labour demand”. Economists had expected 265,00 jobs. The unemployment rate stabilised at its historically low level of 3.6%, slightly higher than its pre-pandemic level.
• Germany posted its first monthly trade deficit in 30 years