A matter of control

Economic Week In Review | Issue 387 | 10 July 2023

UK construction and property

  • HS2 delay | A report from the House of Commons public accounts committee suggests that MPs were not aware of the cost impacts of delaying HS2. Earlier this year plans were delayed for an unspecified period to enable the project to be put on a “more realistic and stable footing.” The impact is expected to cost £200m. The report added that ministers had not learnt lessons from earlier troubled infrastructure projects.
  • National transport strategy | The Institute of Civil Engineers has recommended that a 20-30 year national transport strategy for England should be developed with the overarching vision of creating a sustainable transport network and a later review should decide whether a UK-wide strategy is needed.
  • Refit boom | A lack of Grade A office space in Scotland’s cities is driving a refit boom, according to JLL. Baseline demand for space has been resilient as has the number of transactions, but transaction volumes are below the ten-year average showing that occupiers are looking for less space.
  • Logistics planning | The British Property Federation (BPF) has welcomed a review into how the logistics and freight sector can be boosted by planning reforms under the Government’s Future of Freight – a Long Term Plan review. The BPF claims that policy has underestimated the amount of space needed in the UK.
  • Safety | More people died in work-related incidents in construction than in any other sector last year. 45 building workers died on the job in 2022/23, up from 29 in 2021/22 and 39 in 2020/21.
  • Water saving | The Construction Leadership Council has set out guidelines to reduce water use on sites as the UK enters a period of potential shortages due to hot weather. The guidance can be found here.
  • Administration | According to CreditSafe, the number of construction company failures fell to 20 in June, from 42 in May, but significant concerns exist over the impact of the collapse of Henry Construction Projects Limited and the health of the bond market.
  • PMI Output | The most recent S&P Global/CIPS UK Construction PMI fell to 48.9 in June, a fall from May’s 51.6. It marked the first fall below 50.0 since January. The steepest fall was seen in residential, which reached 39.6.
  • Construction output was a bright spot in the UK’s economy last year as it outperformed European comparisons, but is forecast to fall back this year, according to Euroconstruct. Interest rates, inflation, and fading effects of the post-covid recovery are all weighing on the sector.
  • Wages | A pay deal for the 1,000 construction workers at EDF’s seven power stations has avoided a strike. The engineering roles will be covered by the National Agreement for the Engineering Construction Industry which guarantees pay and conditions.

Materials and commodities

  • Energy | Energy market regulator Ofgem is targeting power generators who threaten to turn off power plants unless “excessive” prices are paid, in what it terms an “on/off” tactic. A new license condition is designed to prevent energy generators from profiting from supply outages they instigate, a practice which is thought to have added £525 million to bills in the last five years.
  • Chinese exports | Special licenses will be needed from next month to export gallium and germanium from China, the metals are key to the manufacture of computer chips and solar panels. China’s Ministry of Commerce said that the move is needed to “safeguard national security and interests”.

UK economy

  • Interest rates | Traders expect interest rates to rise to 6.5%, and JP Morgan has warned that rates of 7% would be needed to curb inflation but this would send shockwaves through the housing market, which should cause the Bank of England to avoid pushing rates that high.
  • House prices according to Halifax, fell at their fastest rate in 12 years, falling at an annual rate of 2.6%.
  • Leaky finances | Ministers have warned that efforts to shore up Thames Water’s finances could impact overseas investment into the UK. The water company is seeking £1bn or a “temporary nationalisation” and the concern is that criticisms of the water regulator, along with a tougher regulatory regime (no matter how temporary it is) could encourage investors to look elsewhere, especially as returns on US infrastructure are higher than in the UK. On Monday Thames Water announced that it had secured £750m from investors to run to March 2025 but would need a further £2.5bn up to 2030.
  • Labour supply | A poll by recruiters by KPMG and the Recruitment and Employment Confederation found that firms are scaling back hiring and increasing redundancies in June. The number of candidates for UK jobs rose at the fastest pace in two and a half years and wage pressures eased.

Global economy

  • Chinese deflation | China’s economy may see deflation in June as CPI is flat year on year, declining 0.2% when compared to the previous month, causing many to call for Beijing to launch a stronger stimulus package which would include cutting rates.
  • US labour | Private hiring in the US grew and firings slowed. Companies added nearly half a million jobs in June, the most in more than a year. Job cuts also fell to an eight-month low. However, vacancies also fell.


  • Climate change is “out of control” according to the UN after unofficial analysis shows the world may have seen its hottest seven days in a row. It warned that “if we persist in delaying key measures that are needed, [we are] moving into a catastrophic situation”.
  • Sustainable City Charter | 35 property businesses and institutions have signed up to the Westminster Sustainable City Charter which commits them to working towards a goal of reducing carbon emissions from buildings, and making the area net zero by 2040. The local authority area has some of the highest carbon emissions in the UK, and 60% is from commercial buildings.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,256.94 -3.65 0.84
FTSE 250 18,003.97 -2.24 -4.81
Nikkei 32,388.42 -2.41 22.14
CSI 300 3,825.70 -0.44 -13.62
S&P 500 4,398.95 -1.16 12.81
Nasdaq 13,660.72 -0.92 17.41
CAC 40 711.88 -3.89 17.88
Dax 15,603.40 -3.37 19.89
$ per £ 1.2837 1.01 6.70
€ per £ 1.1711 0.60 -0.94
Gold £/oz 1,499.19 -0.83 3.53
Brent Oil $/barrel 78.47 4.77 -26.00

Weekly Summary

A strong theme in the news recently has been the desire and need for long-term plans for sustainability goals, workload provision, and infrastructure upgrades which is perhaps unsurprising given the time needed to achieve these goals. It could also reflect a sector needing to understand the scale and certainty of future workload.

Recent wage agreements and news will be put into perspective this week as updated wage data will be released by the ONS will give an insight into the likely longevity of current inflationary pressures.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst