A plan for success

Economic Week In Review | Issue 433 | 10 June 2024

General Election

  • Blueprint for Growth | A dozen construction chiefs have called for a series of reforms which will enable the UK’s pipeline of 244 infrastructure projects to be built. The plan (available here) includes:
    • Depoliticising infrastructure delivery by using the National Infrastructure Commission to implement strategy
    • Appointing a Cabinet Minister for Infrastructure
    • Self-certification system to accelerate delivery by allowing post-consent, non-material changes in Nationally Significant Infrastructure projects.
    • A more flexible immigration system
    • Replacing the Apprenticeship levy with a more flexible skills levy
    • Investment continuity
  • Materials | The Construction Products Association has set out its priorities for the next government which it hopes will support growth, innovation, and procurement. Available here.
  • Mortgage guarantees | Labour has pledged to help 80,000 people buy a home through a “permanent” mortgage guarantee scheme called Freedom to Buy

UK construction and property

  • Output | The latest PMI survey shows the construction sector grew at its fastest pace in two years, to a reading of 54.7 in May. Growth was driven by all three categories, as housing returned to growth. The sharpest increase was seen in commercial work.
  • Strikes | Members of the GMB union at Crane Building Services & Utilities have ended their strike, accepting a 7% pay deal.
  • Project starts | Glenigan’s latest construction index shows that the decline in new work is beginning to level out and returning to “relative stability”. London has had the sharpest fall, with starts down 30% in the quarter, and 25% lower than last year.
  • Office starts | The latest Deloitte Crane Survey shows that developers have paused new schemes in London as the volume of space under construction has reached an all-time high. New project starts in the capital have fallen by almost 20% in the last six months. A glut of work has been continuing recently because of pent-up work following pauses in 2020-2022, with construction at unsustainable levels due to “defensive actions” by developers.

Global economy

  • French politics | After Marine Le Pen’s National Rally party won a key EU election, French President Emmanuel Macron has called a snap election. The first round of elections will be held on 30th June, with a run-off on 7th The leader lost his parliamentary majority two years ago.
  • US economy | 272,000 jobs were added to the US labour market in May, more than the predicted 180,000 increase. Unemployment has consistently been at or below 4% for 30 months, the longest period in half a century. Many expect the data to push back the timing of a US rate cut.
  • China’s exports | Official customs data showed that exports from China grew faster than expected in May, growing by 7.6% in the year. Imports rose by 1.8%, less than forecast. It is hoped that a recovery in international demand will support the economy while internal demand is low.
  • Bank rates | The European Central Bank has reduced its main interest rate by 0.25 percentage points to 3.75%, its first cut in almost five years.
  • Electric vehicle tariffs | The EU is expected to impose import tariffs on electric vehicles from China, which many note may cause retaliatory measures on EU exports.

UK economy

  • Wages | Official data will be updated this week, and analysts expect wage growth to accelerate this week, posing a problem for the Bank of England which is looking for inflationary pressures to subside before it lowers the base rate. Economists expect an increase of 6.1% in the three months to April (the period which also covers the 10% increase in the minimum wage).
  • GDP growth | A report by the Resolution Foundation says that GDP per capita growth since 2010 has been “unspectacular” and that has been the result of a rising population, caused by high levels of immigration. It adds that since the 2010s, productivity has grown by just 0.6% per year and that investments need to be boosted to encourage the economy.
  • Unemployment | The Trade Union Congress (TUC) has produced an analysis showing that unemployment in the UK is increasing at the fastest pace among 38 of the world’s richest countries.
  • “Credible vision” | The Institute for Government has said that most state services are performing worst than at the time of the 2019 election. The thinktank suggests that political parties should be honest with voters with a “credible vision” of what they can achieve.

Materials and commodities

  • Timber | Imports of timber and panel products slowed in the first quarter of 2024, according to data from Timber Development UK. Prices have stabilised.
  • Oil prices are being closely watched this week as OPEC and the International Energy Agency will comment on the state of the market. Prices have recently stabilised after three straight weeks of losses.
  • Copper prices have increased 20% this year, and theft of copper cable in the south of England has also increased by 20% this year, according to Hampshire and Isle of Wight police. The metal is seen as a proxy for industrial growth due to its use in power grids, factories and solar panels. However, forecasts are conflicted as China is known to have front-loaded a lot of its purchases of copper this year.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 8,245.37 3.16 9.03
FTSE 250 20,555.37 -0.84 7.67
Nikkei 38,683.93 0.51 19.89
CSI 300 3,574.11 -0.56 -6.84
S&P 500 5,346.99 1.32 24.38
Nasdaq 17,133.13 2.38 29.22
CAC 40 8,001.80 0.11 10.93
Dax 18,557.27 0.32 16.35
$ per £ 1.2725 -0.09 1.16
€ per £ 1.1775 0.29 0.61
Gold £/oz 1,803.29 -1.27 15.67
Brent Oil $/barrel 79.62 -2.45 6.46

Weekly Summary

This year of elections around the world will no doubt bring a lot of change, some of which will impact the construction and property industries. In the UK, the main party manifestos are expected to be released this week, with various trade bodies clear in the support they need from central Government. However, there is a real need to ensure that this support is sustainable, predictable, and useful.

A more immediate focus for this week will be the update on wage data from the ONS which is thought to set the expectations for the Bank of England’s plans.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst