The countdown begins

Economic Week In Review | Issue 431 | 28 May 2024

General Election

The Prime Minister has called a General Election on 4th July 2024, meaning that Parliament will be dissolved on Thursday after being prorogued on Friday 24th May. Neither the House nor their committees will meet until Parliament reopens on 17th July (after the new Parliament meets on 7th July), therefore many Bills and decisions which were in progress have been halted.

We will be watching for the release of the main manifestos and will sum up what they mean for the London market. Ahead of that, we will track some of the key construction-relevant messages here.

  • New Towns | Labour has pledged to work with the private sector to deliver a series of “new towns”, committing to build 1.5 million homes over five years, with 40% affordable houses.
  • Support | More than 120 businesses have signed a letter of support endorsing Labour’s economic plans.
  • Infrastructure bodies | Labour announced plans to merge the National Infrastructure Commission and Infrastructure and Projects Authority to create the National Infrastructure and Service Transformation Authority  (NISTA) which would have “new powers” and an “updated mandate”.
  • Taxes | The Conservatives have pledged to raise the level at which pensioners’ income is taxed. The Institute for Fiscal Studies stated that the cost of the policy is £2.5bn.

UK construction and property

  • Infrastructure delays | Planning decisions on the £9bn Lower Thames Crossing will be delayed by up to six months due to the General Election. The £1.2bn expansion of Luton airport and Associated British Ports’ £100m Immingham Eastern Ro-Ro Terminal will also be delayed.
  • Nuclear | As trailed in the March Budget, Wylfa in Anglesey has been selected as the preferred site for a new nuclear power plant, similar in scale to Sizewell C and Hinkley Point C.
  • Architect sentiment | The latest sentiment survey from the Royal Institute of British Architects was positive (+2) or the first time since June 2023. It is the longest negative run since the survey began in 2009. In the next quarter, only 17% of practices expect workloads to fall, with the majority (63%) expecting them to stay the same.
  • Site wages | The latest Hays/BCIS Site Wage Cost index shows that average wages increased 7% in the year to Q1 2024, and 1.6% between Q4 2023 and Q1 2024. The strongest quarterly growth was seen in skilled mechanical and electrical workers, whilst the greatest annual move was for skilled building trade workers.
  • Rent reforms scrapped | The flagship Renters Reform Bill is expected to be scrapped due to the General Election. It was not passed before Parliament was prorogued.
  • Cyber attacks | A new report by Kroll (a risk advisory firm) has warned that cyber attacks on construction firms have increased, with email scams doubling in the first quarter of 2024.

Global economy

  • European rates | The chief economist of the European Central Bank (ECB) has said that the Bank is ready to start cutting rates, despite many expecting the US Federal Reserve to make the first move. Many now expect the ECB to make the first move.
  • Japan | The Corporate Services Price Index (the cost of business services) rose by 2.8% year-on-year in April, the fastest pace since early 2015. It is encouraging for policymakers who have been looking for signs of wage-led growth.

UK economy

  • Normal inflation | The British Retail Consortium (BRC) reported that store prices have grown at an annual rate of 0.6% in May, down from 0.8% in April, and much lower than the 9% peak seen in May 2023. The BRC’s chief executive, Helen Dickinson said that “shop price inflation has returned to normal levels”.
  • Energy bills | Ofgem, the energy regulator, lowered the energy price cap by 7% to £1,568/year due to falling wholesale costs. However, its chair said that bills are not expected to fall substantially over the next decade due to the burden of upgrading the electricity network to support the transition to renewables.
  • Water bills | Ofwat, the water regulator, is expected to refuse most of the bill increases requested by water companies. Thames Water has requested bill increases of 59%. The decision has been delayed until 11 July due to the election.
  • Skills crisis | Research from the Learning and Work Institute found that the number of adult learners has fallen by 47% since 2010/11 as per capita funding for adult skills has fallen by 28% from the government and by 20% from employers.
  • Visas | Analysis by the Financial Times of people receiving a skilled work visa shows that “chef” is the most common occupation for new workers arriving on the visa. International recruitment of programme and software developers has fallen rapidly since a peak in mid-2022. The analysis expects the number of chefs to fall in the coming months as the minimum salary requirement increases.
  • Trade routes | The Royal Navy has deployed HMS Duncan – a Type 45 destroyer – to protect international trade routes in the Middle East.

Materials and commodities

  • Iron ore prices dipped after demand from China weakened, however, global shipments of iron ore increased 8.4% weekly. Many expect that seasonality in steel product demand will drag down the consumption of iron ore.
  • Aluminium stocks in Japan fell by 2.3% compared to the previous month.
  • Oil | OPEC+ will meet on 2nd June to discuss their joint oil production levels. The group represents around 41% of global oil production. The markets seem to have taken the group’s decision to abandon a planned in-person meeting in favour of a video conference as a sign that there is a broad agreement amongst the group to continue current cuts. The group has only met in person twice since the start of the Covid pandemic.

Friday to Friday

Price / Index Week %
Annual %
FTSE 100 8,317.59 -1.22 9.05
FTSE 250 20,770.93 0.10 10.52
Nikkei 38,646.11 -0.36 25.00
CSI 300 3,601.48 -2.08 -6.48
S&P 500 5,304.72 0.05 26.14
Nasdaq 16,920.79 1.41 30.40
CAC 40 8,094.97 -0.89 10.60
Dax 18,693.37 -0.06 16.95
$ per £ 1.2743 0.34 3.28
€ per £ 1.1743 0.50 1.96
Gold £/oz 1,832.24 -3.64 16.23
Brent Oil $/barrel 82.12 -2.19 6.72

Weekly Summary

The long-awaited General Election has been cast for 4th July. In addition to watching for the relevant information for the construction and property sectors, consideration should be given to how it may affect some large construction schemes awaiting planning decisions.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst