In the spotlight again

Economic Week In Review | Issue 395 | 4 September 2023

UK construction and property

  • Housebuilding | Housing associations have cut their housebuilding rate by 22% as they try to counter the effects of inflation, interest rate rises, and regulatory pressures. A report by Octopus Real Estate revealed that a third of housing associations have reported deficits of 11%-25% on individual schemes as the cost of debt has increased.
  • Pollution rules | Last week’s removal of nutrient neutrality rules has unlocked 140,000 homes, according to the House Builders Federation. The changes will also see the funding for the Nutrient Mitigation Scheme doubled to £280m, with agricultural runoff and wastewater treatment plants being targeted, but many are concerned that it will negatively impact the health of rivers.
  • RAAC concrete | Schools built from lightweight concrete have been ordered to close and begin the new academic year online, over fears they could collapse. There are concerns that other public buildings could be impacted.
  • Civils work | A survey by the Civil Engineering Contractors Association (CECA) of its members showed that 46% said that their workload had increased over the past year, while only 15% said that they had seen a slow down, with Scotland and Wales showing more improvement than England. Workload growth is concentrated in four sectors: nuclear, renewables, water & sewerage and harbours & waterways. It fell in seven other sectors, including motorways/trunk roads, preliminary works and railways.
  • Sizewell C | £341m was released by the Government – from already allocated funds – to help prepare the site, procure key components, and expand the workforce. The site is expected to support 1500 apprenticeships.
  • Carbon and planning | After its high-profile refusal of planning permission for the redevelopment of its Oxford Street site, Marks & Spencer is lodging a legal challenge with the High Court, stating that the Department for Levelling Up, Housing & Communities had “wrongly interpreted” planning policy.

Materials and commodities

  • Steel decarbonisation | Morgan Sindall will design and build a research and development facility near Port Talbot to help the decarbonisation of the metals industry. It will be called SWITCH – South Wales Industrial Transition from Carbon Hub – and is expected to be operational in 18 months.
  • Steel subsidies | The Government is in talks with Tata Steel UK for a funding package worth £500 million to help the producer switch to less carbon-intensive technology, which would include electric arc furnaces. The initial offer of £300 million was rejected by Tata. Unions are concerned that the change would result in job cuts.
  • Insulated pipework | The Thermal Insulation Contractors Association (TICA) has urged a review of the pre-insulated pipe and duct market after concerns that some products do not perform at their advertised levels.
  • Coffee grounds | The Royal Melbourne Institute of Technology University (RMIT) has developed a way of making concrete 30% stronger using recycled coffee grounds.
  • Copper | Europe’s largest copper producer is investigating a suspected conspiracy between suppliers and employees after inventory worth hundreds of millions of Euros was found to be missing. Shares in the company fell as a result of the news.
  • Timber underwriting | Aviva announced its plans to include underwriting of commercial property developments with engineered timber structures.

UK economy

  • House prices in the UK fell at their fastest rate since 2009, falling 5.3% in the year to August 2023.  
  • Economic revisions | The ONS has revised its figures for GDP throughout the Covid-19 pandemic. The new data shows the economy was 0.6% bigger in the final three months of 2021 compared to pre-pandemic levels. The previous figures said that the UK economy was 1.2% smaller

Global economy

  • Manufacturing activity in China has fallen for its fifth consecutive month. The PMI reading improved marginally from 49.3 to 49.7, but remains below the 50.0 marker for “no change”
  • Chinese economy | The People’s Bank of China announced plans to reduce the amount of foreign currency that banks are required to hold. It is one of many new measures aimed at supporting the weakening economy. Other announcements in the week included support for the property industry and tax breaks for child and parental care, and education.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,464.54 1.72 2.52
FTSE 250 18,536.90 2.24 -1.68
Nikkei 32,710.62 3.44 18.30
CSI 300 3,791.49 2.22 -5.77
S&P 500 4,515.77 2.50 15.07
Nasdaq 14,031.81 3.25 20.64
CAC 40 7,296.77 0.93 18.31
Dax 15,840.34 1.33 21.38
$ per £ 1.2595 0.19 8.78
€ per £ 1.1675 0.18 1.14
Gold £/oz 1,541.08 1.23 3.60
Brent Oil $/barrel 88.55 4.82 -4.81

Weekly Summary

The revision to Covid-era GDP is marked and changes the narrative into more of an upbeat one. This undoubtedly means that forecasts will be re-written, changing the UK from a global outlier, into the middle of the G7 group. There are severe differences between sectors, which will take some time to unpick, as well as understanding what this means for the coming years.

Construction materials are, again, at the heart of new headlines, demonstrating how much change there is in the market and how much more change is yet to be implemented, which in turn will translate into demand peaks – either for materials or people.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst