Issues in focus

Economic Week In Review | Issue 388 | 17 July 2023

UK construction and property

  • National Planning Policy Framework | The Government is to delay the new NPPF until autumn. It was expected in spring. The new timeline means that it will be published after the Levelling Up and Regeneration Bill becomes law. Developers have blamed policy changes for a hiatus in planning, with many local authorities putting local plan developments on hold.
  • Planning delays | Data from the Department for Levelling Up, Housing and Communities shows that planning decisions have fallen by two-thirds in 10 years. The number of major planning applications that councils had made decisions on within the required 13-week time period fell from 57% in 2013-14 to 19% in 2022-23.
  • Planning reforms | British Land and Landsec have together called for urgent changes to planning in order to stimulate regeneration in town centres and unblock the redevelopment of brownfield sites. Although questions could be asked of the capacity within the planing departments.
  • Construction output fell 0.2% in May 2023, following a fall of 0.9% in April. The fall was led by private new housing and non-housing repair and maintenance, and partly caused by the additional bank holiday.
  • Office to labs | Plans to convert an office building in Canary Wharf for life science and technology use has been approved.
  • Infrastructure | Plans for the Stonehenge tunnel have been approved by the Department for Transport.
  • Hospital spending | The National Audit Office has warned that the Government will miss its target of building 40 new hospitals by 2030. It reported that most of the major project element has been programmed for 2025 but so far, has not standardised the designs to modularise and reduce costs. Combined with the lack of cost-cutting on design and inflation, the plan looks in ill health. It also warned that if the throughput of projects is not managed correctly, capacity at the four named contractors could be seriously constrained.
  • Unlocking housing | The Prime Minister and the Housing Secretary are reported to be working on a nutrients crisis plan as the development of more than 100,000 homes is being held up in the planning stage by the requirement for nutrient neutrality.

Materials and commodities

  • Construction Product Testing Regime | The Construction Products Association has responded to the Independent Review into the testing of construction products which was issued earlier this year. Their recommendations can be found here.
  • Steel | British Steel has imposed an increase of £30/tonne, with immediate effect. It blamed sustained high levels of raw material costs in recent months.
  • Oil prices rose above $81 as supplies were disrupted in Libya and Nigeria. Whilst they did not cause a significant fall in supply, there are already concerns that supply is tight, especially as OPEC predicts that demand will rise in the second half of the year. If this forecast comes true, National Australia Bank expects oil prices to rise above $100.
  • Brick supply | After mothballing a factory earlier in the year in a £10m cost-cutting drive as demand for bricks has fallen, Forterra has begun to make job cuts. It had previously hoped that demand would increase in the second half of the year. The latest data from the Department for Business & Trade shows that there has been a 30% fall in brick deliveries in the year to May 2023.

UK economy

  • Job listings with Reed Recruitment are almost 25% lower than three months ago, and 26% lower than the same period in 2019. They peaked in mid-2021.
  • Unemployment in the UK rose at its largest monthly pace, increasing 0.8% in May to 4.3%
  • Pay | Average pay, excluding bonuses rose at an annual rate of 7.3% in the three months to May, matching its highest-ever increase.
  • GDP growth | The UK’s economy showed no growth in the three months to May 2023.
  • Public debt | The OBR has warned that public debt could increase to 300% of GDP by 2070 as the population ages and tax receipts fall. The forecaster also warned that climate change and geopolitics posed “significant” risks to finances.
  • UK manufacturing | France’s Renault and the Chinese owner of London taxis, Geely, are to form a new company which will invest £6bn into the development of low-emission petrol, diesel, and hybrid engines. Its headquarters will be in the UK.

Global economy

  • Growth in China | The latest data showed just 0.8% growth in the second quarter, down from 2.2% in the first quarter.
  • International manufacturing | Apple is diversifying its manufacturing base away from China. Tata Group is nearing an agreement to acquire an Apple supplier’s factory in India as soon as August.

Environment

  • Pollution | A four-year study based in Bradford found that controlling pollution and improving air quality would reduce demand on the NHS. Days of high pollution in the city were found to lead to increased numbers of patients presenting at NHS services for breathing problems. A third of GP and NHS respiratory visits were attributed to nitrogen dioxide.
  • Fines for polluters | The Government confirmed that it will scrap the cap on penalties for environmental offences. The current limit is £250,000.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 7,434.57 2.45 3.85
FTSE 250 18,566.81 3.13 -1.42
Nikkei 32,391.26 0.01 20.91
CSI 300 3,899.10 1.92 -8.22
S&P 500 4,505.42 2.42 16.63
Nasdaq 14,113.70 3.32 23.24
CAC 40 7,374.54 3.69 22.18
Dax 16,105.07 3.22 25.19
$ per £ 1.3111 2.14 10.50
€ per £ 1.1669 -0.35 -0.74
Gold £/oz 1,493.41 -0.39 3.78
Brent Oil $/barrel 79.87 1.78 -20.91

Weekly Summary

Against a backdrop of growth levelling out, and construction output falling off, planning, pollution, and products are key issues that the industry needs to confront in the short term. These issues also show the enduring nature of decisions made by policy, and how difficult it is to enact change in the short term.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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