Tipping the balance

Economic Week In Review | Issue 373 | 3 April 2023

UK construction and property

  • HS2 | The National Audit Office’s (NAO) latest report shows that the price of the delayed HS2 Euston station has increased to £4.8bn since 2020 (its 2020 budget was £2.6bn) and is now £400m more than the larger scheme it replaced. The NAO warned that a “further reset is required” and that the DfT and HS2 cannot demonstrate value for money. Up to the end of 2022, £1.5bn had been spent on land purchases and preparatory work in the area and £568m on the station up.
  • EPCs | As of 1st April 2023, landlords are unable to continue to let a commercial property with an EPC lower than E. Property consultants Rapleys has warned that 130,000 properties (93m sqft) across England and Wales are not up to the standard and suggests and estimated cost to improve of £13.95bn.
  • Fire safety | The Construction Industry Training Board has recommended that all construction workers enrol on a fire safety course after discovering a worrying lack of awareness. Its first course, Fire safety awareness in construction and the built environment is free and aimed at workers of all levels and occupations.
  • Commercial deals | Investors made deals worth £6bn in Q1 2023 for offices retail, and industrial properties, according to CoStar. Whilst this is an increase in levels seen at the end of 2022, it is half the 10-year average. Deals in London were dominated by Asian investors, who accounted for three-quarters by volume.
  • Business rates revaluation will come into effect from 1st April 2023 and will be the first of its kind for six years. The London office sector is expected to face an additional £1.3bn of business rates over the next three years according to Altus Group, whilst retailers will see rates fall as shop rateable values have fallen. Colliers commented that some office occupiers (particularly those in the tech and creative industries) would be priced out as rents and rates in fringe locations have increased at a greater pace than in traditional core locations. The recent Budget gave support to small businesses occupying self-contained units, but not for those in open-plan or shared areas.
  • House building levels have fallen, helping to slow house building cost inflation as measured by the BCIS Private Housing Construction Cost Index. The BCIS found that inflation peaked in Q2 2022 at 15.3%. It also expects output in the market to fall by 15.5% this year.

Materials and commodities

  • Steel quality | The British Constructional Steelwork Association is to allow non-members to sign up to its quality scheme in response to new building safety requirements. The BSCA said that changes to regulations are the most significant in a generation and all links in the supply chain must closely examine their own practices and those of their suppliers. Access to the scheme will show that a contractor can meet or exceed the requirements of new legislation.
  • Oil | Opec surprised the markets with a production cut of 1.15m barrels a day from May. It claims the move will stabilise markets.

UK economy

  • Port delays | The Easter break has once again caused problems at the port of Dover. Additional border checks have caused total delays of 10 hours. More cumbersome biometric checks (in line with other third-nations to the EU) have previously been delayed until at least the end of 2023.
  • Non-essential spending | More than half of consumers have reduced spending on non-essential spending and 49% plan to spend less as a result of increasing energy costs according to a survey by KPMG. It also found that of the 3,000 people asked, average savings were £7,744 and 34% said they were using savings to help meet essential costs.
  • Research investment fund | Eight universities in the Midlands have launched a combined investment vehicle to fund new companies. Mindforge has raised £215m and hopes to become a northern innovation hub.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,631.74 3.06 1.24
FTSE 250 18,928.30 2.35 -10.79
Nikkei 28,041.48 2.40 1.36
CSI 300 4,050.93 0.59 -5.27
S&P 500 4,109.31 3.48 -9.60
Nasdaq 12,221.91 3.37 -14.30
CAC 40 7,322.39 4.38 9.55
Dax 15,628.84 4.49 8.18
$ per £ 1.2368 1.18 -5.67
€ per £ 1.1376 0.15 -4.18
Gold £/oz 1,596.81 -1.28 8.78
Brent Oil $/barrel 79.77 5.08 -23.58

Weekly Summary

Change seems to be a constant driver of the market currently, whether it be in regulations, ratings, sentiment, or preference, and not all of it is domestically driven. This also ensures some level of upward pressure in the construction market as buildings keep pace with necessary changes, albeit tempered by faltering output levels.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst