A matter of attraction?

Economic Week In Review | Issue 467 | 17 February 2025

UK construction and property

  • Digitisation | The Ministry of Housing Communities and Local Government (MHCLG) announced a 12-week project with Land Registry to ensure easier data sharing. The project will design and implement data rules for the property sector to allow information to be shared more easily between conveyancers, lenders and other parties involved in a transaction. Currently information such as building control and highway details are predominantly paper-based or recorded in non-machine-readable formats. It also said there are no established protocols for assessing, sharing or verifying data, which is slowing down the process. The work will be carried out with the Digital Property Market Steering Group, a collection of sector and government experts, set up by the previous government which included the RICS and UK finance.
  • Technology | A survey of IT directors from some of the top 150 companies in the UK by UK Connect sought to understand which key trends shaping the future digitisation of the construction industry. The survey showed 27% of companies are considering AI and automation, 21% are considering IoT Sensor Networks, 12% are considering Private LTE/5G Networks, 9% are considering 5G for enterprise and 6% are considering cloud connectivity.
  • Apprenticeships | The construction sector is waiting to see whether it will benefit from new government plans to shorten apprenticeships. Altering academic requirements should create up to 10,000 more apprenticeships a year across all industries. The announced plan is to reduce the minimum duration of some apprenticeships from 12 to eight months, which would take effect in August, subject to the legislative timetable. Although it’s not clear whether the construction sector will benefit from this change, it has been specifically mentioned in the second line of a press release announcing the changes.
  • Labour shortages: The Construction Industry Training Board (CITB) has said the number of people starting construction apprenticeships needs to triple to address labour shortages. In the 2023/24 education year there were 33,000 starts. It also stated that only half of people who start an apprenticeship in construction go on to pass their final assessment and receive a qualification, so while apprenticeships start need to increase, achievements must also rise significantly in England. 50,000 additional workers will be needed in each of the next five years to meet construction demand.
  • Construction output increased by 0.4% last year, marking the fourth consecutive year of annual growth. However, the sector fell short of the 0.8% growth in overall UK GDP in 2024 and output fell by 0.2% in December compared to November. Despite construction output increasing new orders were at their lowest level since the initial Covid-19 lockdown with new construction work reducing by 5.3% last year, with infrastructure work suffering the worst contraction at 9.3%. Therefore, growth was largely driven by repair and maintenance work, which rose by 8.5% in 2024.
  • Heathrow expansion steelwork | Heathrow Airport’s boss has announced a multibillion-pound plan to build new infrastructure while “laying the groundwork” for its long-proposed third runway. In a speech at British Steel’s plant in Scunthorpe, Heathrow Chief executive Thomas Woldbye signed the UK steel Charter, prioritising the use of domestic steel. The department of business and trade estimates that a third runway for the airport would require 400,000 tonnes of steel with the British Constructional Steelwork Association estimating the UK’s structural steel market has a capacity of 300,000 tonnes per annum.
  • New nuclear | The first new nuclear power plant site since the 1970’s is currently going through a process to become licensed. Last Energy Inc plans to build a microreactor in South Wales. Since 1978 all new reactors have been built on, or next to areas that already have a nuclear plant. It reportedly won’t need government funding and is being built to directly serve industrial customers.
  • Affordable homes | The government announced an extra £300m grant funding for the current Affordable Homes Programme (AHP). The Ministry for Housing, Communities and Local Government (MHCLG) said this funding will enable 2,800 extra homes to be built, with around half for social rent. A total of £60m will be available for homes in London with £240m for the rest of England.

Global economy

  • Retaliatory measures | EU Chief Ursula Von der Leyen vowed that U.S tariffs on aluminium and steel “will not go unanswered,” and they will trigger countermeasures from the 27-nation bloc. In 2018, the Trump administration put tariffs on aluminium and steel, with the EU retaliating on a range of American products. These sanctions were lifted under the Biden administration, but only temporarily, and may be reactivated by the EU.
  • Germany’s trade surplus with the US grew to $70 bn in 2024, well above the previous record of $63 bn in 2023. German exports to the U.S increased 2.2% year-on-year to a record $161.3 bn with imports falling 3.4% to $91.4bn last year. Exports were led by cars and pharmaceutical goods and positioned the U.S as the top buyers of goods “Made in Germany.” This comes at a time where countries are waiting to learn how U.S President Donald Trump will impact trade with the U.S.

UK economy

  • UK economy | Britain’s GDP expanded 0.1% in the October-December period after zero growth in the third quarter of 2024. This went against the Bank of England prediction that GDP would shrink by 0.1% between October-December. Although GDP grew by 0.1% in the final quarter of 2024, GDP per head fell by 0.1% as economic output growth was diluted by population growth.
  • VAT tariff plans | Deutsche Bank has calculated that UK exports might face additional charges of 21% because of Trump’s policy. This could result in a reduction of around £24bn from the UK economy over the next two years, according to an economist at the National Institute of Economic and Social Research.
  • Stamp duty | Rightmove has warned that the housing market in London faces a bottleneck as buyers look to complete deals by April, when the price threshold at which stamp duty applies, is lowered.

Materials, commodities and currencies

  • Gas prices | Natural gas prices in Europe have had a volatile start to 2025 and rose to their highest levels in two years last week. However, on Monday morning, prices had returned to €50 a megawatt-hour, a substantial fall from the recent peak.
  • Iron ore | Australia’s largest iron ore port has reopened after Tropical Cyclone Zelia subsided and minimal damage was reported. Australia is the world’s biggest shipper of iron ore.
  • Copper | The market seems to be expecting copper to be next on the list for U.S. tariffs, as prices at the London Metal Exchange (LME) have been steadily increasing this year. Prices at the LME have increased 10% year-on-year, and in the U.S. prices have risen 20% as some expect a supply shortage. However, there are now concerns that if tariffs do not materialise, prices could rapidly fall.

Environment

  • Oil fields | Thirteen more oil and gas licences could be cancelled as UK ministers decide new guidance for fossil fuel extraction. This has come about after a landmark court case with the admission that many more licences may ultimately be unlawful after two major oil and gas fields – Rosebank and Jackdaw – were found to have unlawfully been granted licences. A judge ruled their applications did not consider the emissions that arise from burning the oil and gas extracted from the projects.
  • Renewable fuel | Scientists from Cambridge University have developed a solar device that can pull pollution from the air and convert it directly into fuel – syngas – for cars and planes. The new reactor takes inspiration from photosynthesis and requires no cables or batteries to turn atmospheric carbon dioxide into syngas with researchers saying the reactor offers a new solution to the climate crisis, providing an alternative to current Carbon Capture and Storage Technologies.
  • Price volatility | Extreme weather events are expected to cause volatility in food prices throughout 2025, according to research by Inverto.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 8,732.46 0.37 13.24
FTSE 250 20,913.01 0.51 8.97
Nikkei 39,149.43 0.93 1.72
CSI 300 3,939.01 1.19 15.72
S&P 500 6,114.63 1.47 22.16
Nasdaq 20,026.77 2.58 26.95
CAC 40 8,178.54 2.58 5.28
Dax 22,513.42 3.33 31.52
$ per £ 1.2606 1.71 0.15
€ per £ 1.2009 0.07 2.73
Gold £/oz 2,290.18 -0.73 43.32
Brent Oil $/barrel 74.74 0.11 -10.46

Weekly Summary

Last week was National Apprenticeship week, and given the scale of construction’s skills crisis, it was encouraging to see a lot of coverage of the schemes on offer within the construction sector. Along with increasingly high numbers of young people classed as “not in education, employment or training”, research has shown that there has been a general decline in low-skill, entry-level jobs. Advertising clear pathways into industry (especially in light of increasingly expensive university courses), should help address the skills gap.

This article in Building Magazine, from Turner & Townsend’s UK MD – Patricia Moore – discusses the topic more.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst
Kishan Patel
Kishan Patel,
Research Analyst

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