Setting priorities

Economic Week In Review | Issue 435 | 24 June 2024

UK construction and property

  • “Melting ice cubes” | LondonMetric has compared London office values to melting ice cubes as shorter leases, stricter environmental criteria and higher expectations from tenants have sped up the rate of obsolescence.
  • Bonds | Insurer QBE Europe announced it will withdraw from the construction bonds market. It currently provides bonds for 20 of the sector’s 30 largest contractors. It will continue to provide cover for smaller companies up to £1.5m.
  • Safety | The Building Safety Regulator (BSR) has paused work on 50 ”higher risk” construction projects as the building control firm did not register as an approved inspector under the new rules. The schemes were going through the process of being signed off by private building control companies.
  • Paternity leave | Wates Group has increased its paternity leave allowance to 12 weeks, which can be taken within the first two years of a child being born. The group also made its maternity, shared parental leave and adoption and surrogacy policies a day-one employment entitlement, and it has also enhanced its carers leave policy.
  • Infrastructure | The Supreme Court has ruled that Surrey County Council has breached planning laws by approving an oil extraction development as it failed to consider the wider environmental implications of the project, arguing it should have included the impact of burning the fuel, not just the act of extracting it. The ruling could impact other large infrastructure projects that generate large volumes of pollution.

Global economy

  • Emerging markets | Currencies in emerging markets are on track for their worst six months since 2020 due partly to a resilient US economy that has strengthened the dollar.
  • Remote work has increased the number of people with disabilities entering the US jobs market according to the Center for Employment and Disability Research at Kessler Foundation.
  • Birth rates | The Organisation for Economic Co-operation and Development (OECD) has warned that birth rates in the world’s richest countries have more than halved since the 1960s to reach a record low and that we must prepare for a “lower fertility future”. The birth rate in the UK has fallen from 2.72 in 1960 to 1.53 today.
  • Debt levels | The European Central Bank has encouraged Eurozone countries to reduce debt levels and warned of the “significant fiscal burdens” of ageing populations, extra defence spending and climate change.

UK economy

  • Border errors | A notice sent out by the Department for Environment, Food and Rural Affairs (DEFRA) accuses traders of making “continuous and/or deliberate” errors on key documents to avoid new border charges and delays which Brexit ushered in.
  • Public sector pay | The Institute for Fiscal Studies (IFS) estimates that settling public sector pay disputes could amount to an extra £6bn to £7bn.
  • Consumer price inflation fell to the Bank of England’s target of 2% for the first time in three years. However, the Bank voted to keep interest rates at 5.25%, due to unexpectedly higher services inflation (5.7%) but signalled that a reduction may be on the cards for the next meeting in August.

Materials and commodities

  • British Steel reportedly asked the government for a support package of £600m to facilitate its transition to lower-carbon electric arc furnaces.
  • Copper prices have seen a marked fall since peaking in mid-May, and have returned to levels seen in April. The increase was driven by assumptions of rising demand which has not materialised. Chinese copper exports have reached a record high, doubling from the previous year.
  • Product passports | A European consortium has launched a project – funded by the EU – to demonstrate the use of digital product passports, focussing on digitisation and sustainability.
  • Liquified Natural Gas | The EU has imposed sanctions on liquified natural gas (LNG) which will limit Russian tankers from using EU ports to transfer LNG to smaller vessels for transport to third countries.

Environment

  • Renewables | Analysis by energy consultancy, Cornwall Insight has found that 63% of 4000 onshore renewable energy projects in the UK have been refused planning permission, been abandoned, withdrawn or allowed their planning permission to expire. An additional 18% have been sent back for revision. It currently takes four years for major infrastructure projects to pass through the planning process.
  • Ecological health | Citizen science has found that 75% of Britain’s rivers are in poor ecological health due to pollution from water companies or agricultural run-off. The testing of rivers has been reduced since the vote for Brexit as the EU’s framework required water to be tested annually. It has since been reduced to every three years.
  • Skills | Innovation charity Nesta has surveyed heat pump installers and found that a lack of skilled installers is limiting the UK’s drive to replace gas boilers.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 8,237.72 1.12 10.40
FTSE 250 20,442.35 1.60 13.18
Nikkei 38,596.47 -0.56 17.74
CSI 300 3,495.62 -1.30 -9.53
S&P 500 5,464.62 0.61 25.67
Nasdaq 17,689.36 0.00 31.10
CAC 40 7,628.57 1.67 6.49
Dax 18,163.52 0.90 14.74
$ per £ 1.2642 -0.33 -0.45
€ per £ 1.1822 -0.29 1.36
Gold £/oz 1,836.28 -0.15 21.54
Brent Oil $/barrel 84.33 2.07 14.19

Weekly Summary

This week’s news serves as a reminder that change does not stop because a general election is nearing and enduring challenges such as skills and sustainability need addressing with increasing urgency.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst