The bigger picture

Economic Week In Review | Issue 432 | 3 June 2024

General Election

  • Planning officers | Labour announced proposals to hire 300 planning officers. However, that is less than a tenth of the planners who have left since 2010, according to the Royal Town Planning Institute.
  • Apprenticeships | The Conservatives plan to fund 100,000 more apprenticeships by scrapping poor-quality university courses and strengthening the powers of the Office for Students.
  • Energy | Labour set out plans to create a publicly owned company called Great British Energy, based in Scotland to drive green infrastructure projects and decarbonise Britain’s energy supply by 2030, funded by a windfall tax on big oil and gas companies.

UK construction and property

  • WeWork is expected to emerge from bankruptcy hoping that a reduced debt burden and fewer offices will secure its financial security. It has plans to operate 337 offices globally, approximately half the number it had in June 2023.
  • Home strategy | Liverpool City Council plans to build 2,000 homes a year by 2030. The draft strategy will be presented to the council’s cabinet next week ahead of an eight-week consultation period.
  • Offices construction| The latest data from Glenigan shows that offices work starting on site fell by 13% in the three months to April, when compared to the previous quarter, and 26% lower than the year before. Major projects fell 51% in the quarter and 63% annually. Whilst the number of detailed planning permissions fell 15% in the quarter, they rose 26% annually and contract awards were also up 40% in the year.
  • Small nuclear reactors | Holtec, an American nuclear firm which has teamed up with Balfour Beatty, has shortlisted four sites for a £1.3bn factory to build small modular reactors. In December it was given a £30m government grant to develop the reactors.

Global economy

  • Eurozone inflation unexpectedly rose to 2.5% in May, it is the first increase this year. Core inflation (excluding energy and food) rose from 2.7% to 2.9%.
  • India’s election | Polling stations have closed in India’s election which has seen almost a billion registered voters. Exit polls suggest that Prime Minister Narendra Modi will win a historic third term.
  • Mexico’s election | Mexico elected a leftwing climate scientist and former mayor of Mexico City as the next President with 60% of the vote.
  • South Africa’s election | South Africa’s African National Congress lost its majority for the first time in 30 years and will seek coalition talks.

UK economy

  • Living standards | The Institute for Fiscal Studies reported that median disposable incomes have grown by just 6% since 2010 despite strong employment growth and tax cuts for middle earners.
  • ONS staff | In addition to having key data sets challenged by low numbers of returns to surveys, the ONS is struggling with staffing numbers, with more than a fifth of the workforce leaving the agency in the year to March, a much larger number than those who joined. In addition to overhauling its processes, the ONS is struggling with staffing levels and strikes after it decided to end its flexible working policy.
  • House prices | According to Nationwide, annual house price growth has increased to 1.6% at the end of May, from 0.6% in April.

Materials and commodities

  • Mining merger | An attempted deal between BHP and Anglo American has been abandoned. The deal was valued at £38.6bn and driven by Anglo American’s significant copper assets. Anglo American said that the deal terms were not good enough but shareholders encouraged the company to continue negotiating.
  • Rebar supply | ArcelorMittal has warned of a “catastrophic” planning decision that will cut the UK’s access to rebar by half after Chatham Docks in Kent closes, to be redeveloped into a mixed-use scheme. The steel manufacturer has called for the incoming Secretary for Levelling Up, Housing and Communities to re-evaluate the project and warned that if the scheme goes ahead, ArcelorMittal will have to pull out of the UK reinforced concrete steel market.
  • Aluminium | UK-based trade body European Aluminium has warned that a gap in EU sanctions against Russia leaves the UK construction sector at risk of inadvertently using Russian aluminium. Slabs, ingots, and billets – which make up around 85% of imports from Russia – have not been sanctioned.

Environment

  • Carbon offsets | The global market for carbon offsets shrank last year from $1.9bn to $723m according to research from Ecosystem Marketplace. It attributed the 61% fall to recent reports that offsets were “worthless” and often linked to human rights concerns.
  • UK water | There are fears that a recent suspension of all applications for bathing water status will delay the cleanup of rivers and coastal waters for at least two years. Campaigners have been using the designation as a way to drive water quality improvements and force water companies to reduce pollution.
  • Clean air | New research from the University of Birmingham shows that cleaning up the air in the West Midlands to levels set by the World Health Organisation could prevent the early deaths of 2,000 people a year. Additional benefits would be seen with savings of £285m for the NHS and £167m in social care, plus fewer days taken off work.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 8,275.38 -3.90 5.07
FTSE 250 20,730.12 -0.20 8.26
Nikkei 38,487.90 -0.41 22.09
CSI 300 3,594.31 -0.20 -6.93
S&P 500 5,277.51 -0.51 23.24
Nasdaq 16,735.02 -1.10 23.39
CAC 40 7,992.87 -1.26 9.93
Dax 18,497.94 -1.05 15.24
$ per £ 1.2736 -0.05 2.16
€ per £ 1.1740 0.00 0.98
Gold £/oz 1,826.51 -0.31 16.76
Brent Oil $/barrel 81.62 -0.61 7.21

Weekly Summary

Election pledges are beginning to trickle through, with housing, sustainability, infrastructure, and energy policies at the forefront of economic plans, which should be an encouragement for the construction industry. However, the success of these plans relies on the UK having enough labour to build the schemes, the ability to source sufficient materials cost-effectively, and a swift planning process.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst