Looking ahead

Economic Week In Review | Issue 402 | 23 October 2023

UK construction and property

  • Forecasts | The Construction Products Association has revised its forecasts for 2023 and 2024 to -6.8% and -0.3% respectively (its previous view was -7.0% and 0.7%). Despite recent cancellations and rephasing, they anticipate infrastructure activity will remain at its high level, due to continuing work on Phase One of HS2, the Tideway Tunnel, and Hinkley Point C. New housing, and repair and maintenance of housing are expected to fall due to increased interest rates and falling confidence. Overall, it warns that the construction industry is likely to remain in recession until the start of 2025.
  • Property fund | M&G is to close its property fund which has been affected by persistent outflows from UK retail investors and “declining interest.” The fund has been suspended twice in the last seven years. M&G currently has over £500m of property assets.
  • Hotels | Travelodge has announced plans to build 100 new hotels across London stating that there is a shortage of “good quality and low cost accommodation”. The move will more than double Travelodge’s stock in London.
  • Pay | Engineering construction workers – who are covered by the National Agreement for the Engineering Construction Industry – have voted to strike, having turned down a pay deal of 8.5% for 2024 and 3.5% for 2025. Union members say that their pay has fallen 20% behind inflation. The strike could affect work at several oil refineries and Sellafield nuclear facility.
  • Construction wages in August were 4.2% higher than a year earlier, according to the ONS, but fell 2.9% compared to a month earlier.
  • HS2 land |Sir John Armitt, chair of the National Infrastructure Commission has said that selling the land acquired for Phase 2 of HS2 would be a “mistake” and that it should be retained for at least two years to allow revisiting the plans and finding a more cost-effective solution.
  • Planning reforms | A cross-party committee has warned that draft planning revisions to major projects do not provide legal certainty and urged ministers to re-write sections that determine whether a project is compatible with net zero legislation. Reforms to the National Networks National Policy Statement are intended to prevent legal challenges which have delayed major projects in the past.
  • Hospitals | The government has updated the list of NHS estates containing reinforced autoclaved aerated concrete. A total of 42 sites have been identified so far and £698m has been set aside for remediation and failsafe measures.
  • Use less? | National Highways is to cover an integral bridge (with no expansion joints) on the M25 with gauges to measure the actual strain and stress profiles to see if the bridge could have been built with fewer materials. National Highways says the investigations could transform the construction of future bridges, and significantly reduce costs.
  • Infrastructure | The National Infrastructure Commission’s second assessment calls for a “new approach” to delivering national infrastructure, and that the UK needs to invest much more into its infrastructure, with public transport, home heating and water networks in need of renewal. Civil engineering contractors supported the stance, encouraging political parties to take on board the commission’s recommendations.
  • Housing | It is rumoured that the Autumn Statement may introduce measures to support first-time buyers, extending its mortgage guarantee scheme which allows buyers to take out a mortgage with a 5% deposit.

Materials and commodities

  • Graphite | China has imposed export restrictions on graphite which is used in electric vehicle batteries and electrodes in steel making. China is the world’s largest graphite processor, accounting for almost 70% of global synthetic graphite in 2022.
  • Oil | Venezuelan, state-owned PDSVA could boost production by 25% after an easing of US-imposed sanctions, according to a consensus of forecasts by Bloomberg. The additional 200,000 barrels a day could ease supply shortages, but there are questions about how quickly the additional supply can come onstream.
  • British Steel | The move to electric arc furnaces could see 2,000 job cuts at the company’s Scunthorpe plant. The company’s owner, Jingye Group, was recently offered £300m by the UK government to support the move to greener production.
  • Construction chemicals collusion | The Competition and Markets Authority has launched an investigation into suspected anti-competitive behaviour in the supply of chemicals to the construction market. Together with the European Commission it is looking at chemical admixtures and additives for products such as concrete, mortars, and cement.

UK economy

  • Consumer inflation remained at 6.7%. Core inflation (excluding energy, food, alcohol, and tobacco) fell slightly from 6.2% to 6.1%. A greater fall to 6.6% had been forecast. Inflation continues to be stickier than the UK’s peers.
  • Fiscal policy | Research by the Institute for Fiscal Studies suggests that the Chancellor is in a “terrible bind” with taxes near their highest level ever and tight spending plans while being stuck between weak growth and persistently high inflation. It does not expect a fiscal loosening package in the Autumn Statement, warning that doing so would lead to a protracted recession.
  • Wages | In the whole economy, average private sector pay growth (excluding bonuses and arrears) has outpaced inflation for the first time in two years, rising at 7.8% in August. Figures on the wider labour market (such as unemployment and workforce) were delayed due to problems with data collection.
  • Public finances | The government borrowed less than expected in September despite the overall figure remaining high. The difference between spending and tax income was £14.3bn. £1.6bn less than a year earlier, but the sixth highest in September since 1993 (when records began).
  • Credit rating | Moody’s has removed the UK’s negative credit outlook, stating that “policy predictability has been restored.”

Global economy

  • China | China’s key financial policy event which happens every five years, will take place next week. Officials will be focused on resolving financial risks (such as its current property crisis) and local government financing vehicle debt.
  • US economy | Retail sales grew last month, marking the sixth consecutive month of growth. Retail sales and food services were up 3.8% in the year to September, the strongest annual gain since February.
  • Germany | Producer prices fell at their fastest annual rate since records began in 1949, suggesting that inflation may fall further. The price of industrial products fell 14.7% in the year to September, largely caused by falling wholesale energy prices. The IMF expects Germany’s output to shrink by 0.5% this year, before growing 0.9% next year.
  • Japan | The Bank of Japan is expected to end its policy of negative interest rates early next year and normalise its monetary policy.


  • Wind farm | Scotland’s largest offshore wind farm, Seagreen, has begun generating power at full capacity. It is expected to remove more than two million tonnes of CO2 from the grid.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,402.14 -2.60 6.20
FTSE 250 17,032.73 -2.41 -1.01
Nikkei 31,259.36 -3.27 16.25
CSI 300 3,510.59 -4.17 -6.21
S&P 500 4,224.16 -2.39 12.56
Nasdaq 12,983.81 -3.16 19.56
CAC 40 6,816.22 -2.67 12.94
Dax 14,798.47 -2.56 16.24
$ per £ 1.2151 0.12 7.61
€ per £ 1.1473 -0.73 0.11
Gold £/oz 1,628.97 2.37 12.42
Brent Oil $/barrel 92.16 1.40 -1.43

Weekly Summary

With the Autumn Statement less than a month away, and a General Election set to take place next year, many are looking for signs of a confident and committed spending plan, or how the landscape may change next year.

Data suggests that wages continue to be an upward pressure, adding to concerns that the general rate of inflation may remain higher for longer.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst