The long road ahead

Economic Week In Review | Issue 419 | 4 March 2024

UK construction and property

  • Artificial Intelligence | A report by RIBA revealed that 41% of architects have occasionally used artificial intelligence (AI), with 43% saying it made the design process more efficient. Whilst the majority of architects say that they will increase their use of AI, a third of them see it as a threat to their profession.
  • Surplus materials | A Reuse Hub will be opened in Wolverhampton later this year, to keep over-supplied materials out of landfill. It expects to divert 600 tonnes of material in its first year.
  • Tax evasion | Analysis by tax intermediary Rift revealed that 40% of tax evasion is accounted for by building, construction, and engineering trades.
  • House building shortage | The Competition and Markets Authority published a report into possible information sharing between housebuilders. However, its overview of the planning system has caught the attention of many as it suggests a streamlining of the process and recommends increasing the capacity of planning departments. If found guilty of anti-competitive behaviour, the housebuilders could receive fines of up to 10% of their annual worldwide turnover.
  • Social housing | Research by CEBR on behalf of Shelter and the National Housing Federation concluded that by building 90,000 social homes, the next government could add £51.2bn to the economy, including £12bn profit to the taxpayer. Benefits are expected to include:
    • £4.5bn savings on housing benefit
    • £2.5bn income from construction taxes
    • £3.8bn income from employment taxes
    • £5.2bn savings to the NHS
    • £4.5bn savings from a reduction in homelessness
    • £3.3bn savings to Universal Credit
  • Skills shortage | The University Vocational Awards Council (UVAC) has reported that only 21% of the UK’s top 100 universities offered construction apprenticeships.
  • Take up | Denovo’s latest analysis shows that the central London office market was generally resilient in 2023 with record headline rents and strong take up. In total, take-up amounted to 12.7m sqft, slightly lower than 2022’s 12.9m sqft.
  • Reuse | The High Court quashed Michael Gove’s decision to block Marks & Spencer’s development at its flagship Marble Arch store in London saying that the “presumption for the reuse of buildings” was not a feature of the National Planning Policy Framework.
  • Infrastructure funding | Cities across England have received £4.7bn of funds which were previously allocated to HS2 Phase 2. The Prime Minister said that the cities will be empowered to “invest in the transport projects that matter most to their communities – this is levelling up in action.”
  • Levelling up projects | Responses to a Freedom of Information request, as reported in the Guardian, show that less than 20% of the projects sanctioned under the £3.6bn towns fund were expected to be completed by the end of February and less than half will complete by the November. Projects have been delayed due to high interest rates and inflation, and a lack of commitment to adapting to those challenges.
  • Boring news | A third tunnel boring machine has been launched for HS2 Phase 1 in London. A fourth and final machine will launch next month.
  • RAAC | Aberdeen City Council has rehoused tenants after surveyors found that around 500 homes had been built with reinforced autoclaved aerated concrete. Council officers are considering how to ensure long-term viability for the site, ranging from remediation to demolition.

Materials and commodities

  • Oil | Opec+ members voted to extend production cuts for another three months to support higher prices. Output cuts have taken place since 2022 in the face of increasing US production and slowing global demand.
  • Water | Ofwat has said that Thames Water will need to find the funds for its £18bn debt rather than a taxpayer bailout or increasing bills. Thames Water had previously asked the regulator to approve a 40% increase to bills by 2030 and to be granted leniency on regulatory fines and around paying dividends.
  • Bricks | Brickability has warned that falling sales will take longer than expected to recover due to a slowdown in the housing market. It said that UK dispatches in 2023 were 30% lower than the year before, and brick imports into the UK fell 42%.

UK economy

  • Trade volumes | The UK has seen a record five-year decline in trade with import and export volumes 7.4% smaller in 2023 than in 2018. Economists have pointed to Brexit as the main cause, suggesting that data was no longer affected by the pandemic.
  • Goods | More than a third of companies surveyed by the British Chambers of Commerce (BCC) say that they have seen higher shipping costs and delays of four weeks as a result of unrest in the Red Sea. The BCC’s head of trade policy said that there has been some capacity in the shipping-freight industry, which has softened the impact.
  • Budget | The Chancellor has warned that there is a “long path ahead” in cutting the UK’s tax burden and that the current economic forecasts make any cuts in the near term extremely difficult. Ahead of the Budget the Chancellor also announced a £360 million package of government and industry support for the manufacturing sector, stating that life sciences, automotive, and aerospace sectors would benefit from it.
  • Economic impact | The Joseph Rowntree Foundation has warned that the Budget risks a “second lost decade” of living standards.

Global economy

  • Eurozone inflation fell to 2.6% in February. Whilst the rate slowed, it is still slightly higher than expected. Core inflation (which removes more volatile items such as food and fuel) rose 3.1%.
  • Hong Kong’s office market | Several law firms have announced plans to reduce office space in prime locations as mergers, acquisitions, and IPOs have fallen, according to Bloomberg.
  • China | China will set its growth target for 2024 this week, and it is expected to be at “around 5%”.
  • India | Economic growth in Q4 2023 reached 8.4%, beating economists’ expectations. The country is expected to overtake Japan and Germany and become the world’s third-largest economy in the next few years.


  • Air pollution | Health campaigners have called for a global clean air fund. Annually, seven million people die from illnesses attributed to poor air quality. Currently, less than 1% of all funding for international development finance and philanthropic funding goes towards air quality projects.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 7,682.50 -0.31 -3.33
FTSE 250 19,354.38 0.91 -2.87
Nikkei 40,068.44 2.48 43.47
CSI 300 3,537.80 1.38 -14.35
S&P 500 5,137.08 0.95 26.98
Nasdaq 16,274.94 1.74 39.23
CAC 40 7,934.17 -0.41 7.98
Dax 17,735.07 1.81 13.84
$ per £ 1.2651 -0.20 5.47
€ per £ 1.1679 -0.24 3.37
Gold £/oz 1,646.06 2.48 6.80
Brent Oil $/barrel 83.55 0.63 -2.66

Weekly Summary

The long road to recovery seems to be getting longer due to a mix of high input costs and low demand. Construction demand will continue to face challenges from high interest rates, continually high levels of inflation, and attitudes to risk.

This week’s Budget and accompanying forecast from the Office for Budget Responsibility will provide some clarity on the trajectory of the UK’s economy.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst