A necessary focus on skills

Economic Week In Review | Issue 430 | 20 May 2024

UK construction and property

  • Timber systems | Donald Timber Systems has announced plans to invest £10m in its Witney factory to increase capacity and boost technical capabilities. Machinery investments have improved automation and efficiency.
  • Civil robots | Costain and VVB Engineering have developed an Automated Tunnel Robotic Installation System (ATRIS) to replace a traditionally hazardous and time-consuming process of selecting and installing brackets along a tunnel wall. It is expected to increase productivity by 40%, reduce costs by 30% and reduce embodied carbon through a 40% reduction in plant movements.
  • Biodiversity scheme flaws | Rules that require a 10% biodiversity improvement from new building projects in England have been described as flawed by the National Audit Office. It says that the elements are not in place to ensure the long-term success of the scheme and has urged a “substantial re-think from DEFRA”.
  • Piling alarms | To reduce accidents, Cementation Skanska’s piling rigs and cranes will be fitted with human form recognition technology. The equipment will recognise when people or objects encroach on an exclusion zone and suspend the machine. A screen will also offer the operator a 360˚ view.
  • Infrastructure skills risk | The Public Accounts Committee has warned of a worsening skills crisis which will limit the country’s ability to deliver large infrastructure schemes. It also warned that there is a lack of project know-how within departments in Whitehall and as a result, the Government cannot act as an intelligent client.
  • Insolvency | 30% fewer construction companies became insolvent in March 2024 compared to a year earlier. Total insolvencies in the whole economy increased by 37% in the same period.
  • Labour | Data from the ONS shows that the number of people employed in the construction industry has fallen further. There are 500,000 fewer people in the industry than at the time of the 2008 peak. Construction unemployment has increased slightly, closer to the long-run average, but the number of vacancies has fallen (although it remains higher than pre-Covid levels).
  • Wages | Average weekly wages (including bonuses) as reported by the ONS fell 0.1% compared to last year, however when bonuses are excluded, wages grew by 2% suggesting that some heat may have come out of the market, reflective of either the lower general rate of inflation or lower levels of demand. Construction wages are almost 20% higher than pre-Covid.

Global economy

  • Biotech | AstraZeneca has committed $1.5bn to build a pharmaceutical plant in Singapore. It is scheduled to open in 2029 and emit zero carbon.
  • Baltimore | The ship that crashed into Baltimore’s Francis Scott Key Bridge almost two months ago and has blocked one of the US’s busiest ports will be refloated later today in an operation expected to last 21 hours.
  • China’s property crisis | Beijing has allowed local authorities to buy homes at a “reasonable” price to improve demand in the market. The People’s Bank of China also lowered the minimum deposit from 20% to 15%.

UK economy

  • Border checks | The National Audit Office estimates that post-Brexit border costs will amount to £470m per year. It also noted that changes to the checking of goods have been met with “significant issues”, including a critical shortage of inspectors. The government has admitted that authorities “would not have 100% of the staff they required from day one”. The criticism comes just over a week after an IT outage caused lorries to be held at ports for 20 hours.
  • Foreign Direct Investment | In its latest survey, Ernst & Young shows that London is still the most attractive European city for foreign direct investment in financial services. However, it warned that its survey of 900 decision-makers revealed that Paris is likely to challenge London in the coming years.
  • Inflation | The UK is expected to see a lower rate of consumer inflation growth than the Eurozone and the US for the first time in two years. The fall is largely due to the 12% fall in the regulatory cap for UK energy prices. It is, however, important to remember that the rate of inflation in the UK peaked at a higher rate than its peers and has been higher for longer. Many have encouraged reporters not to get too excited by the fall, warning of the importance of considering base effects – the impact of what happened a year ago that makes this year’s figures seem small.
  • Auditors | A report published by the Audit Reform Lab – a think-tank from the University of Sheffield – states that in three-quarters of the 250 large corporate collapses that have happened in the UK since 2010, three in four audit reports have failed to provide any warning in the year before collapse.
  • House prices | The average house price in Britain has reached a record high of £375,000 according to Rightmove. The number of sales agreed in the first four months of 2024 was 17% higher than the same period last year.
  • Bank moves | The Bank of England announced plans to expand its presence in Leeds by 2027 with 500 staff members based there, a tenth of its staff.

Materials and commodities

  • Insulation boards | The Construction Leadership Council’s (CLC) Material Supply Chain Group has warned of price volatility in PIR insulation boards due to a shortage of chemicals in the production process, and the continued high demand. 10% price increases are expected this summer.
  • Timber | The CLC has also warned of shortages of timber-related products which could affect the housing market.
  • Copper prices in the US have risen to a record high because of speculative trading from funds. Forecasts are divided – some think prices may fall as demand from China slows, but supply is constrained as miners have reduced output, whilst a third school of thought is that the current price rally is based only on an expectation that Net Zero 2050 targets will be met (and therefore demand for copper will increase), rather than a real increase in demand.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 8,420.26 -0.16 8.55
FTSE 250 20,749.90 0.51 7.57
Nikkei 38,787.38 1.46 25.90
CSI 300 3,677.97 0.32 -6.76
S&P 500 5,302.27 1.52 26.49
Nasdaq 16,685.97 2.11 31.82
CAC 40 8,167.50 -0.63 9.02
Dax 18,704.42 -0.36 14.92
$ per £ 1.2700 1.39 1.92
€ per £ 1.1685 0.49 1.45
Gold £/oz 1,901.53 0.90 19.65
Brent Oil $/barrel 83.96 1.41 11.09

Weekly Summary

The Public Accounts Committee’s skills warning should be a key takeaway for all within the construction industry (and users or buyers of the end products). Construction’s labour shortage has been well analysed throughout the years, and this week’s data shows that there has been no improvement in the number of people employed in the sector.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst