Economic Week In Review | Issue 389 | 24 July 2023

UK construction and property

  • Planning approvals have fallen by 29% between the first two quarters of 2023, and project starts by 26%, according to data from Glenigan. It warned that the construction industry continues to be “buffeted by strong headwinds with little sign these are going to calm down in the near future”.
  • Refurbishment targets | Michael Gove has refused planning permission for the rebuilding of M&S’s flagship store on Oxford Street, claiming that it would “fail to support the transition to a low carbon future, and would overall fail to encourage the reuse of existing resources, including the conversion of existing buildings”. The Chief Executive of M&S said that the retailer would now review its future position and mentioned that it was “unfathomable why M&S’s proposal to redevelop an aged and labyrinthian site that has been twice denied listed status has been singled out for refusal.”
  • Factories | Tata Group confirmed its plans to build a £4bn gigafactory in the UK. The factory is expected to be in Somerset and will produce car batteries for Tata-owned Jaguar Land Rover
  • HS2 viability | HS2 has been told to publish regular reports on the status of ground investigations in Cheshire after residents raised concerns about the viability of the scheme which passes through previous salt mines and it is thought that could increase the risk of subsidence.
  • Safety regulator | The Building Safety Regulator has appointed the Building Safety Competence Foundation (BSCF) and the Chartered Association of Building Engineers (CABE) as independent competence assessors for building-control surveyors. Without certification, building-control surveyors will no longer be able to work, so more than 4,500 people are expected to be assessed by April 2024.
  • Housing pledge | Rishi Sunak renewed his pledge to build one million homes over this Parliament and is expected to announce new measures such as streamlining the planning system and making it easier to convert buildings to new uses to support the pledge.
  • Insolvencies in the construction industry were 34% higher in May 2023 than in the same month in 2022.
  • Industry forecasts | The Construction Products Association expects an acute recession this year, driven by a double-digit fall in private housing new work and private housing repair and maintenance. It expects total work to fall by 7%. Infrastructure work is expected to remain high due to HS2 Thames Tideway Tunnel and Hinkley Point C (although it also points out that these projects are all late and over budget).

Materials and commodities

  • Gas | China has begun drilling a 10,000m hole to extract ultra-deep reserves of natural gas. It began a similar-sized project in May which was the deepest ever undertaken in China. China’s government has recently pressured energy companies to boost domestic production.
  • Steel production in China rebounded in June but remains lower than a year ago, according to S&P Global Commodity Insights. Construction-related production is still weak but other sectors, including export and government-led infrastructure uses showed resilience.
  • Builders’ Merchants reported that volumes and revenue of sales fell in May. Sales volumes fell 15.1% with price inflation of 10.8%.

UK economy

  • Inflation | The rate of price growth slowed to 7.9%, led by a drop in fuel prices. The rate was lower than expected and increases hopes that the Bank of England may not raise interest rates by as much as expected at its next meeting.
  • Retail sales volumes rose 0.7% last month. Economists had expected a growth of 0.2% but the warmer weather encouraged shoppers. However, the latest survey by GfK showed that consumer confidence plummeted in July due to high borrowing costs and ongoing high prices. The index showed its fastest drop in more than a year.
  • UK borrowing fell unexpectedly in June as tax receipts increased. Public sector net debt was £18.5bn, £0.4bn lower than in 2022, but remains the third-highest June borrowing since records began in 1993.
  • Trade | A report by Make UK shows that despite global trade growing, English and Welsh manufacturers’ share of EU trade has fallen.

Global economy

  • US forecasts | Bloomberg’s survey of economists found that it is now “a toss-up whether the economy suffers a recession or enjoys a soft landing”, although most believe that it will still see some degree of a recession.
  • Affordable housing shortage | Developers in the US have warned that financing gaps will cause a collapse in the provision of new affordable housing in 2025.
  • European interest rates | Despite the European Central Bank’s plan to maintain interest rates at their eventual peak of 4%, economists have forecast rates of between 2% and 4% by the end of next year, highlighting how difficult it is to forecast where inflation will be, and therefore the necessary interest rate.
  • Global inflation rates | Inflation in Singapore slowed to 4.5% in June, in the US it was just under 3%, and core inflation in the Eurozone was 5.5%.


  • Climate action | Over 100 businesses (including property businesses) have signed a letter to the Prime Minister asking for “ambitious action” on Net Zero commitments, which they claim could unlock billions of pounds worth of investment.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,663.73 3.08 3.90
FTSE 250 19,200.45 3.41 -3.15
Nikkei 32,304.25 -0.27 15.73
CSI 300 3,821.91 -1.98 -9.82
S&P 500 4,536.34 0.69 14.51
Nasdaq 14,032.81 -0.57 18.58
CAC 40 7,432.77 0.79 19.56
Dax 16,177.22 0.45 22.06
$ per £ 1.2851 -1.99 6.92
€ per £ 1.1559 -0.95 -1.67
Gold £/oz 1,526.28 2.20 6.09
Brent Oil $/barrel 79.64 -0.29 -23.21

Weekly Summary

The CPA’s forecast for the year shows how the economy is beginning to drag on the construction market. It also shows that the industry needs an actionable plan from the Government to deliver its Levelling Up, housing, Net Zero, and infrastructure plans to provide security to firms in the sector.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst