Going for green

Economic Week In Review | Issue 449 | 30 September 2024

UK construction and property

  • Skills and MMC | The newly formed Skills England has said that modern methods of construction (MMC) should be “expanded considerably” to counteract the skills shortage and drive productivity.
  • Supply chain debt | The final accounts report that ISG owed £710 million to suppliers, and in 2022 had a turnover of £2.1bn with a pre-tax profit of £11.5m.
  • Planning review | The consultation on the changes to the National Planning Policy Framework (NPPF) shows that sector bodies are supportive and enthusiastic about changes such as reintroducing mandatory targets, reviewing the grey belt, and supporting SMEs.
  • Great British Nuclear | Four firms will enter the competition’s final round to enter negotiations with the public body to deliver Small Modular Reactors.
  • Social housing standard | The RICS and the National Housing Federation are working to develop a stock condition survey standard for social housing. Currently, there is no consistent way to measure the health of social housing.
  • Brownfield passports are being explored to help accelerate building on brownfield sites in urban areas. The passports will give automatic planning approval to proposals which meet design and quality standards.

Global economy

  • Snap election | One day before being sworn in, Japan’s incoming Prime Minister, Shigeru Ishiba, called a snap election for the end of October. Analysts have suggested that the decision is an effort to consolidate the increasingly polarised Liberal Democratic party. The party’s approval ratings have fallen recently as living costs are increasing at a time when real wages are falling.
  • Turning a corner | According to the OECD, the global economy has remained resilient through the first half of 2024. Accommodative monetary policies and improvements to real incomes are expected to create steady growth of 3.2% in 2024 and 2025. However, consistent geopolitical and trade tensions represent a risk to inflation and global activity.
  • China’s stimulus | China’s central bank has cut interest rates to support the debt-laden property sector and promised to ease restrictions on borrowing to invest in stocks and shares. The stimulus caused strong demand for stocks, leading to a glitch which overwhelmed the stock exchange. The Shanghai Composite Index rose by more than 4% within hours of the announcement.
  • US port strikes | 45,000 workers are preparing to strike after the International Longshoremen’s Association (ILA) accused the United States Maritime Alliance (USMX) – which represents 40 ocean carriers and terminal operators – of making insulting wage offers to staff and commitments to Analysts at JP Morgan estimate the strike will cost the US economy $5bn per day with a one-day backlog taking an estimated four to six days to clear, according to analysts at Sea-intelligence, a shipping advisory firm.

UK economy

  • House prices for terraced houses have risen at their fastest rate in two years, growing at 3.5% according to Nationwide. Detached houses saw slower growth at 1.7%.
  • GDP growth in the second quarter was revised down to 0.5% from 0.6% with downward revisions in all sectors.
  • Future growth | The OECD’s forecast expects the UK’s economy to grow faster than that of Japan, Italy and Germany. However, it also expects the UK to have the highest level of inflation amongst the G7. The OECD described British economic growth as ‘robust’ upgrading the growth rate to 1.1% from a forecast of 0.4% in May. Further growth of 1.2% is predicted by the OECD in 2025. In the May forecast, the UK was behind all other G7 nations, now it’s on par with Canada and France but still behind the US.
  • Skills | A “blueprint for change” published by Universities UK has recommended that ministers should aim for 70% of school leavers entering tertiary education by 2040. The group – which represents vice-chancellors – has asked for grants for disadvantaged students and an end to the attack on the number of international students.

Materials and commodities

  • Sustainable materials | Research by Ramboll and Climate Group found that 45% of companies are willing to pay for products with 25% lower emissions, while 57% would pay more for products which lowered emissions by more than 50%. The full report is available here.
  • UK steel | Port Talbot has begun the process of winding down blast furnace 4 in preparation for its transition to an electric arc furnace. Unions have commented that the new plans for the plant represent an improvement on plans made under the previous government.
  • Copper | Ahead of an annual gathering that the London Metal Exchange, copper producers have warned about price volatility due to a disconnect between increasing demand and the slowness of governments to issue new mining permits. Chilean copper producer Antofagasta expects a shortage of metal which will cause sharp swings in price.
  • Low-carbon concrete | Meta has moved to invest in low-carbon concrete production to reduce the amount of embodied carbon used to build its data centres. They have created a deal with CarbonBuilt, a company that develops a low-carbon concrete product that hardens after chemically reacting to CO2, permanently storing it sequestering carbon from the atmosphere.
  • Oil prices fell more than 3% on Thursday as the Financial Times reported that Saudi Arabia is preparing to abandon its unofficial price target of $100 per barrel as it gets ready to increase output.

Environment

  • Coal-fired power | The UK’s last remaining coal-fired power plant closed this week, 57 years after it first began generating electricity and 142 years after the UK began using coal for power.
  • Flooding | Storm Boris has flooded countries including Poland, Romania, Austria, Italy, and the Czech Republic. The World Weather Attribution (WWA) stated one recent four-day period was the rainiest ever recorded in Europe. The kind of rainfall caused by Storm Boris is still rare; expected to occur once every 100-300 years in today’s climate but could get worse if the pace of global warming increases.
  • Hurricane Helene made landfall in Florida on Friday 27th of September. The Category 4 storm has caused power outages for over one million customers and severe flooding in several areas. Helene is the 7th most powerful storm ever recorded in Florida and tied with the  14th most powerful to hit anywhere in the United States. 
  • Climate envoy | Rachel Kyte – former climate chief at the World Bank – has been appointed to lead the UK’s efforts to forge a global coalition on climate action and lead the UK’s return to high-level environmental diplomacy. The role was axed under the previous government.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 8,320.76 1.10 9.37
FTSE 250 21,240.56 1.96 16.20
Nikkei 39,829.56 5.58 25.02
CSI 300 3,703.69 15.70 0.38
S&P 500 5,738.17 0.62 33.82
Nasdaq 17,948.32 1.49 35.85
CAC 40 7,500.26 0.47 4.39
Dax 18,720.01 0.11 20.33
$ per £ 1.3304 1.26 8.55
€ per £ 1.1923 0.58 3.70
Gold £/oz 1,968.01 0.16 25.12
Brent Oil $/barrel 74.72 4.34 -19.89

Weekly Summary

This week, the news suggests that meaningful steps are being taken to reduce carbon emissions in the UK, with the closure of the last coal-fired power station, the transition at Port Talbot, and the reappointment of a Special Representative for Climate in the UK.

The week has also served as a reminder of the enduring impact of the last few years of volatility in the economy with the effects of ISG’s collapse becoming known. The week’s news should encourage the industry to examine how risk and low margins are passed through the supply chain.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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