In need of a strategy

Economic Week In Review | Issue 444 | 27 August 2024

UK construction and property

  • Wages | The Hays/BCIS Site Wage Cost Index shows that construction site wages increased by 2.4% in Q2 2024, showing a 4.6% annual increase. The fastest growth was seen in mechanical and electrical trades which saw a 5.6% increase in Q2, with annual pay up 14.8%. Plant operatives saw no increase at all.
  • Insolvency | In the year to July 4,303 companies went into administration, the lowest rolling annual total since 2020. The Building Cost Information Service (BCIS) said that high interest rates and the “delivery of legacy projects” were the main causes of insolvency.
  • Expansion plans | McDonald’s announced a £1bn expansion project to build 200 new restaurants in the UK and Ireland in the next four years. Waitrose also announced a £1bn plan for 100 new convenience stores and 4 supermarkets in the next five years, alongside the modernisation of its existing 150 stores.
  • Nuclear “supercluster” | A 40-acre site has been sold to Chiltern Vital Berkeley Ltd to develop the UK’s first low carbon “supercluster” for nuclear research, education and AI. It is intended to be a centre of excellence for small modular and micro reactor technology.
  • Transport review | Whilst in opposition last year, and after the cancellation of the northern leg of HS2, Labour commissioned a review into a new rail link between the Midlands and West Yorkshire. The report by the Urban Transport Group was launched yesterday and called for a medium-term objective to draw up an integrated Transport Strategy for England, and for the Government to urgently set out a “bold long-term vision and ambition for transport infrastructure”.

Global economy

  • Germany | GDP fell by 0.1% between April and June as Investment fell by 2.2%, private consumption by 0.2% and Government spending increased by 1%. Economists have voiced concerns that the country is slipping into crisis, sentiments echoed in the most recent S&P Global reports on factory output last week.
  • Trade tariffs | Canada has followed the United States and imposed a 100% tariff on electric vehicles from China, and 25% on imported steel and aluminium. Canada’s Prime Minister, Justin Trudeau, said China was not “playing by the same rules.”

UK economy

  • Lending boom | Banks in the UK are expecting a lending boom following the Government’s housebuilding ambitions with analysts suggesting that a five-year consistent plan would give buyers certainty and confidence.
  • Retail prices fell for the first time in nearly three years. The British Retail Consortium reported that prices fell by 0.3%, driven by reductions in summer clothing caused by poor weather.
  • Energy prices | A new price cap of £1,717 will begin from 1st October and represents a 10% increase. A further increase of 3% is expected for January.
  • Industrial strategy | Trade body Make UK has reiterated its calls for Labour to produce a joined-up industrial strategy which could increase investment and fix some of the damage caused by Brexit. It argues that the UK is at a disadvantage as it cannot compete with the Inflation Reduction Act in the US or the green deal in the EU. An industrial strategy was part of the Labour manifesto.
  • New ways of working | A survey by the Chartered Management Institute found that employees are increasingly choosing to work for employers who offer sabbaticals.
  • Financial warning | In a speech on Monday morning, Kier Starmer warned that the autumn Budget is going to be “painful” and hinted that taxes will need to rise to improve public finances, saying that “those with the widest shoulders should bear the heaviest burden”.

Materials and commodities

  • Steel | BHP Group announced that it will focus on its copper output hoping it will offset losses from declining Chinese demand for steel. It warned that iron ore supply is outpacing demand with steel surplus flooding the market.
  • Oil | Goldman Sachs and Morgan Stanley have lowered their outlooks for oil, expecting less than $80/barrel next year. Goldman Sachs suggests that the recent decision from OPEC+ to reverse supply cuts could be aimed at “strategically disciplining non-OPEC supply”. The price of oil has fallen recently, following weak Chinese demand and rising supply from outside the cartel.
  • Cement | A factory in Wrexham will begin producing ultra-low carbon cement in October. Government-funded Material Evolution will produce 150,000 tonnes per year of cement which produces up to 85% less embodied CO2 than Ordinary Portland Cement.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 8,327.78 0.20 13.48
FTSE 250 21,189.48 0.67 16.87
Nikkei 38,364.27 0.79 21.31
CSI 300 33,627.19 -0.55 -10.30
S&P 500 5,634.61 1.45 27.89
Nasdaq 17,877.79 1.40 31.54
CAC 40 18,633.10 1.70 19.20
Dax 18,633.10 1.70 19.20
$ per £ 1.3195 2.25 4.97
€ per £ 1.1806 0.60 1.31
Gold £/oz 1,901.25 -1.86 24.89
Brent Oil $/barrel 79.02 -0.83 -6.46

Weekly Summary

As the UK’s economic scene changes, the industry is looking for confident signs of long-term plans and strategies to enable and support growth. October’s Budget will offer some certainty, although today’s announcements suggest that stability is still some way off.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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