The other future of work

Economic Week In Review | Issue 415 | 5 February 2024

UK construction and property

  • Payment terms | Analysis by Construction Enquirer of submissions to the Government’s Duty to Report on Payment Practices and Performance has revealed the industry’s fastest-paying contractors. However, the self-reporting style, and that it is based on the number of invoices, rather than value, have raised concerns over the accuracy of reporting.
  • Plant sales | Data from the Construction Equipment Association shows that retail sales of construction and earthmoving equipment were almost 9% lower in 2023 than a year earlier.
  • Infrastructure pipeline | The government published its National Infrastructure and Construction Pipeline which details £775bn of spending over the next 10 years over 660 projects. It had been expected at some point in 2023. It confirms that the HS2 link from Old Oak Common to Euston will be built with no public funding. Energy will receive the largest funding, amounting to almost £316bn.
  • European investment | The latest European Capital Trends Report from MSCI Real Assets shows that the UK office sector remains as Europe’s largest investment market despite a 42% fall in overall transaction volumes. Investment in European commercial real estate overall fell last year to the lowest level since 2012 due to higher interest rates.
  • Surveyor confidence | The latest survey from RICS showed some increase in optimism amongst surveyors, despite lower levels of activity. Infrastructure workloads continued to grow, and house building reported a further decline. However, trends were becoming less negative overall.
  • Power grid | Octopus Energy is discussing plans with Ofgem to build its own electricity pylons, challenging the National Grid’s 30-year monopoly on the power network. The announcement comes as Octopus warns that it may move billions of pounds of investment overseas unless the UK overhauls its power grid, claiming that it currently faces long delays in connecting projects to the National Grid.

Materials and commodities

  • Material extraction | According to a new report from the UN, global extraction of raw materials is expected to increase by 60% by 2060, with significant costs to the environment. The report suggests that efforts should be undertaken to reduce demand rather than simply increase “green” production. It also claims material needs for construction could be cut by about 30%. The full report is available here:
  • Copper | KoBold Metals – a mining start-up backed by Bill Gates and Jeff Bezos – claims to have found Zambia’s largest copper deposit in a century. It is thought capable of becoming one of the world’s top three high-grade mines. Recent reports of the ever-increasing use of copper, and a lack of new high-quality deposits have concerned many. The project is yet to conduct any studies into the cost and ease of extraction.
  • Water bills in the UK will increase at a rate above inflation in April, rising by 6% in England and Wales, and 8.8% in Scotland. Next year is expected to see record levels of investment from water companies to reduce sewage released and improve water supplies.
  • Building supplies | The latest Builders Merchant Building Index show that sales values were 5.7% lower in November 2023 compared to a year earlier despite price increases of 7.2%. Sales volumes were 12.1% lower, with heavy building materials, landscaping, and timber & joinery products contributing the most.
  • Steel sales| The British Constructional Steelwork Association (BSCA) expects a slowdown in steel sales. Consumption fell 1% between 2022 and 2023 and is expected to fall a further 3% by 2026 due to a decline in the construction of offices and industrial sheds.

UK economy

  • Population | The UK is expected to have a population of nearly 74 million by 2036, passing 70 million in 2026, a decade earlier than previous estimates.
  • State pension | The International Longevity Centre, in its report State Pension Age and Demographic Change, suggests that to maintain the number of workers for every state pensioner, the UK state pension age would need to rise to 70 or 71. The age is being pushed upwards not just due to the number of people reaching a pensionable age, but by people leaving the workforce due to ill health.
  • Post-Brexit controls | Health certificates will now be required for food, plant and animal imports from the EU into the UK.
  • Post-Brexit deals | Talks with the US and India have stalled, whilst discussions with Canada have come to an abrupt halt over hormone-treated beef.
  • House buying | According to Halifax, 73% of first-time buyer mortgages were in joint names with two or more people in December 2023. The average deposit now stands at £53,414, £21,000 more than a decade ago.
  • Tax cuts | In contrast to his January tone, the Chancellor has warned that there is less scope for tax cuts in the March Budget than there was at the time of the Autumn Statement. The change in sentiment comes after international monetary organisation such as the IMF warned against large tax cuts.
  • Rate cuts | The Bank of England’s Chief Economist said that a reduction in interest rates is still “some way off”, and that policy needs to remain “restrictive” until lingering inflation is “squeezed out of the system.”
  • Energy bill impact | In a survey by PricewaterhouseCoopers, 81% of businesses plan to increase their prices, largely due to high energy costs, and 72% say they have reduced their profits or margins. The percentage is larger than seen in the last two years. Energy prices have fallen recently but remain above the long-run average and UK gas future prices for delivery in the next two years, are twice as expensive as they were three years ago.
  • Heat pumps are expected to fall out of the Conservative targets this year as the industry lobbied the government arguing that quotas were unrealistic given sluggish demand and a shortage of installers. Regulations beginning in April will force boiler companies to ensure heat pups account for 4% of their total boiler sales or be fined £3,000 for every shortfall. In expectation of the total fines, many had started increasing the cost of gas boilers.

Global economy

  • US job openings increased in December, reaching their highest level in three months. The reading exceeded expectations.
  • China | The promise of “forceful” measures from the Chinese authorities to halt a stock market sell-off has largely been seen as too little, too late. Almost $2tn has been lost from the market, and more than 40% of people surveyed at a Goldman Sachs conference thought the country was “uninvestable.”


  • Carbon regulation | A group of construction industry professionals in the UK has called for all political parties to ensure that embodied carbon regulation is included in forthcoming manifestos, stating that it cannot be left up to the industry.
  • Wind power | The UK energy regulator has begun an investigation into wind farms overstating how much power they will produce after claims that they have been generating extra costs for consumers by routinely overestimating output. The issue reportedly comes from the grid not being able to handle all the energy that wind farms produce, so system operators will pay farms to turn their turbines off, and the payment is based upon an estimated output. An exaggerated forecast will maximise these curtailment payments. An analysis by Bloomberg shows that of 121 windfarms 40 overstated by at least 10% and 27 of those by more than 20%.


Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,635.09 2.32 -1.67
FTSE 250 19,338.02 2.51 -3.48
Nikkei 35,751.07 -1.82 30.56
CSI 300 3,333.82 2.00 -20.27
S&P 500 4,890.97 1.06 20.15
Nasdaq 15,455.36 0.94 32.99
CAC 40 7,634.14 3.56 7.57
Dax 16,961.39 2.45 11.96
$ per £ 1.2718 0.34 2.73
€ per £ 1.1704 0.53 2.66
Gold £/oz 1,589.07 -0.20 2.16
Brent Oil $/barrel 83.55 6.35 -3.59

Weekly Summary

This week’s edition shows some of the challenges involved with moving to a decarbonised energy system but also reinforces the need to do so to reduce the impact of volatile pricing, which is often driven by geopolitical forces.

It also shows a continuing trend in the UK for the strength of infrastructure work which is helping relieve some of the excess capacity which may be in the system as other sectors reduce in output. This should be further supported by the government’s infrastructure pipeline.


Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst