Heat in the market

Economic Week In Review | Issue 384 | 19 June 2023

UK construction and property

  • Output | Data from the ONS shows that all new work in the construction industry fell 0.6% in April 2023. All new work fell 1%, mainly due to private work.
  • Retentions | A proposed clause to the Procurement Bill which would mandate project bank accounts in public sector projects over £2m was blocked in the Commons.
  • Infrastructure | In giving evidence to the London Assembly Budget and Performance Committee, Transport for London said that a lack of long-term funding clarity from the Government means that the “pipeline of major enhancements and renewals has slowed down” and that Crossrail 2 has moved from a current priority to a future one. TFL’s current funding deal with the Government runs out in March 2024.

Materials and commodities

  • Availability | The latest report from the CLCs Product Availability Group notes that there is “good availability for most building materials across the UK”, except for rock mineral insulation which remains on allocation. Some other materials such as plasterboard or roof tiles are on allocation, but this is due to local issues.
  • Net Zero plans from the Global Cement and Concrete Association (GCCA) have been approved by the UN as part of their push for net zero by 2050. The cement and concrete industry claims to be the first heavy industry to set out a detailed plan.
  • Dry lining academy | Willmott Dixon has set up its fourth prison-based academy in HMP Lincoln. It currently has schools in HMP Elmley in Kent, HMP Cardiff (in partnership with Etex) and HMP Belmarsh in London. Eight people at a time will pass through the course, learning dry lining skills and earning their CSCS card. The first cohort will finish this month.
  • Concrete | The Government has announced an enquiry into the use of reinforced autoclaved aerated concrete (RAAC) across its estate after significant concerns have been raised over its durability.

UK economy

  • Mortgage market | As the average mortgage rate for a two-year fixed deal increased to nearly 6%, some are calling for the Government to provide emergency support to people whose homes may be repossessed. Opponents of the idea warn that this would support high inflation for longer. Analysis by Neal Hudson – a UK housing market analyst – of house price inflation and wage inflation, the ratio of mortgage repayments to income is the equivalent of a 14% mortgage rate in the 1980s.
  • Exports | Figures from the UN show that the value of British goods and services exports rose by 6% between 2012 and 2021, the worst growth rate in the G7. For comparison, exports from Germany rose 22.7% and the combined EU figure rose 29.1%.
  • UK tax regime | A review by the Treasury Committee found that the complex tax system in the UK is an obstacle to economic growth. It has more than 1,180 relief systems that can create perverse incentives for people not to be economically active.
  • Rate expectations | Deutsche Bank expects the Bank of England to lift rates by 0.25% this week, to 4.75%, then a further two increases to 5.25% before pausing in November.
  • Company insolvencies have increased by 40% in the year to May. Whilst insolvencies have been artificially low throughout Covid, yet insolvencies are higher than pre-pandemic levels.

Global economy

  • Bank jobs | Wall Street banks have announced large job cuts as they unwind the post-pandemic hiring spree, pushing headcounts to record highs.
  • Interest rates in Europe | The IMF has called for the European Central Bank (ECB) to increase the base rate, warning of “persistently high inflation” and that a more restrictive fiscal policy would be needed over a “sustained period”. The ECB has increased its central rate to its highest since 2001, 3.5%.
  • Interest rates in the US | The Federal Reserve voted unanimously to forgo another rate increase, ending its run of 10 consecutive increases. It did, however, signal support for two more increases by the end of the year
  • US and China | The US Secretary of State has met with China’s top diplomat in the first steps to repair their national relationship after alleged Chinese spy balloons flew over North America.


  • Drought | As suppliers are already considering how to ensure water supply through summer, some are warning that drought could be seen as the next pandemic. A hosepipe ban has already been imposed in the South East Water area.
  • Climate planning | More than 100 property companies, backed by the UKGBC, have written an open letter to the Prime Minister calling for planning to be reformed in line with climate change laws. It argued that the current system does not provide a consistent approach to handling climate change and environmental considerations or align with climate laws which could cause legal challenges later.
  • Aircon demand | The National Grid has fired up two coal-fired power plants, breaking a 46-day coal-free run. The recent hot weather has increased the demand for air conditioning.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,642.72 1.06 8.93
FTSE 250 19,030.89 -0.32 0.55
Nikkei 33,706.08 4.47 29.82
CSI 300 3,963.35 3.30 -8.02
S&P 500 4,409.59 2.58 19.99
Nasdaq 13,689.57 3.25 26.77
CAC 40 7,388.65 2.43 25.26
Dax 16,357.63 2.56 24.62
$ per £ 1.2814 1.86 5.03
€ per £ 1.1728 0.22 0.66
Gold £/oz 1,526.74 -2.07 1.41
Brent Oil $/barrel 76.61 2.43 -32.28

Weekly Summary

With more urgent concerns such as the interest rate rises and the mortgage market which seem to happen every week, we cannot afford to lose sight of the longer-term issue of climate change and the impacts that it is already having. Recent events have shown us how economics and sustainability are closely related.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst