End of the road?

Economic Week In Review | Issue 390 | 31 July 2023

UK construction and property

  • Second staircase | The Government has lowered the threshold for a second staircase in new residential buildings from 30m to 18m. The move had been expected by many after the lower threshold was supported by the Chartered Institute of Housing and the National Fire Chiefs Council. The mayor of London brought the 30m limit in with immediate effect in February this year.
  • Mortgage rates | Four of the UK’s largest lenders reduced mortgage rates last week after general inflation fell faster than expected in anticipation of a 0.25% increase in Base Rate from the Bank of England, rather than a jump of 0.5%.
  • New home registrations with NHBC fell 42% in Q2 when compared to a year earlier. The North West, North East, and Eastern regions saw the largest falls, and London was the only region to show growth with registrations increasing by 8%.
  • T-levels | Ofsted has warned that T-levels need “considerable work” in order to fulfil their ambitions. It reported that the experiences of different students varied “considerably” and that there was a shortage of qualified staff and placements. T-levels were launched in September 2020 and are equivalent in size to three A-levels, and have been developed alongside industry to prepare a student for entry into skilled employment. There is a specific construction T-level.
  • Battery park | Planning permission has been given to Carlton Power for a battery energy storage scheme, which it claims will be the world’s largest. It will be built in the Trafford Low Carbon Energy Park in Greater Manchester and, subject to a final investment decision, will begin construction next year.


  • Stonehenge | The tunnel on the A303 faces a new legal challenge, with opponents claiming that the design is the same as the one which was thrown out in 2021.
  • Road schemes | The House of Commons cross-party committee has recommended that MPs abandon major new road projects, and instead focus on the maintenance of the existing network.
  • HS2 | The Infrastructure and Projects Authority – the Government’s infrastructure watchdog – has branded HS2 as “unachievable” in its current form. It said, “There are major issues with project definition, schedule, budget, quality and/or benefits delivery, which at this stage do not appear to be manageable or resolvable.”
  • Sizewell C | The Government has given £170m to the Sizewell C projects. It will enable the site to prepare for construction, procure key components and expand its workforce.

Materials and commodities

  • Iron ore prices fell ahead of China’s PMI data release, and concerns that steel output caps and a lack of stimulus will affect demand.
  • Logistics | Shipping companies have ordered new vessels on an unprecedented scale as they reinvest profits made over the last couple of years. The global order pipeline has reached a historic level of almost $90 billion. However, the market is known for swinging from boom to bust, and concerns about oversupply are increasing.
  • Rationalisation | Marshalls announced that it will close a factory in Lanarkshire, and make 250 job cuts across the group. This is in addition to the 150 job cuts made in the second half of 2022
  • Sales | Builders’ Merchants announced that sales by volume and revenue fell in May. Like-for-like sales were 1.3% lower by value despite high levels of inflation.

UK economy

  • Interest rates | The Bank of England will meet this week and is expected to raise the base rate by 0.25% to 5.25%.
  • Debt | A forecast from Fitch suggests that the UK is on track to incur the highest debt interest costs in the developed world, spending £110bn (or 10.4% of government revenue) servicing debt. In contrast, the average cost of servicing the national debt amongst Western Europe and North American countries is expected to fall from 4% in the five years to 2021, to 3.7% this year.
  • Temporary housing | Data from the Department for Levelling Up, Housing & Communities shows that the number of people living in temporary accommodation in England has reached a 25-year high. Almost all measures of homelessness show large increases over the past year.

Global economy

  • Germany | GDP figures showed that Germany’s economy stagnated between Q1 and Q2 2023.
  • Spain | GDP grew 0.4% between Q1 and Q2 2023. The country is currently in a political stalemate after an election failed to conclusively select a leader.
  • France | Inflation fell to 5%, the lowest level in 16 months.
  • China | Factory activity in China contracted for a fourth consecutive month, with a PMI reading of 49.3. Non-manufacturing PMI (which includes construction and agriculture) also fell to 51.5, short of the 53.0 expected by Goldman Sachs. A reading below 50.0 indicates contraction.
  • US | GDP grew by 2.4%, improving on the 2% seen in Q1. Consumer spending increased by an annual rate of 1.6%.


  • Drought | Germany’s Rhine River has had its water levels increased following rain in the region which has allowed shipping to resume in some areas. However, northern areas are still too shallow to allow cargo ships through and vessels are unable to sail fully-loaded.
  • Carbon pricing | The Government has reformed the UK’s carbon trading scheme, making it cheaper to pollute in the UK than in the EU.
  • Energy security | Prime Minister Rishi Sunak announced plans for more oil and gas drilling in the North Sea with over 100 new licenses granted.
  • Warmest June and July  |  The era of global warming has ended and “the era of global boiling has arrived”, the UN secretary general, António Guterres, has said after scientists confirmed July was on track to be the world’s hottest month on record.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,694.27 0.40 3.65
FTSE 250 19,124.14 -0.40 -5.16
Nikkei 32,759.23 1.41 17.83
CSI 300 3,992.74 4.47 -4.25
S&P 500 4,582.23 1.01 10.94
Nasdaq 14,316.66 2.02 15.54
CAC 40 7,476.47 0.59 15.94
Dax 16,469.75 1.81 22.14
$ per £ 1.2867 0.12 5.60
€ per £ 1.1657 0.85 -2.41
Gold £/oz 1,524.88 -0.09 5.14
Brent Oil $/barrel 84.99 6.72 -22.74

Weekly Summary

The impact of inflation, both on costs and on servicing debt is becoming apparent, as is the precarious nature of infrastructure projects.

As the significance of the skills crisis grows within construction, the report from Ofsted is particularly concerning and shows that the industry needs to focus on ways to attract and develop the next generation.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst