Economic Week In Review | Issue 475 | 14 April 2025

UK construction and property

• Building Safety Regulator | The minister for building safety has said the Building Safety Regulator (BSR) is losing too much time organising teams to conduct its work. Teams working on applications generally consist of experts with specialist skills from other organisations and councils, which in a market “whereby resources are tight”, causes delays. The BSR also said the “main driver for longer handling times now is the very high volume of further information requests because applicants are not submitting good, quality applications.”
• Administrations | The number of construction firm failures remained high in March compared to the dip experienced at the end of 2024. In March total company administrations reached 31, an annual rise of 7% compared to March 2024’s total of 29. Before February’s figure of 32, failures had been on a downwards trend with 15 collapses in December 2024 and 10 in January 2025.
• Mental health | JCT is to sponsor a project investigating the mental health of construction workers to better understand the challenges they face. Its aim is to develop a framework of recommended interactions to protect and improve construction workers’ mental health. The study will consider physical, financial, relationship, emotional, cultural, and belonging aspects, work design, and crisis response. The summary of findings will be published in the summer.
• Hotel occupancy | London’s hotel sector had the second highest global average occupancy rate last year, 82%, according to Newmark’s London hotels report. At 82%, occupancy now equals its pre-pandemic level.
• Plant equipment | Ministers confirmed plans to allow hydrogen-powered plants on public roads. At present, these vehicles need a Vehicle Special Order (VSO) to be used on public roads, which is a huge barrier to entry for the wider take-up of low-emission plants. The consultation held last year received only 33 responses, a third of them from representative bodies, with all submissions in favour of allowing new hydrogen-powered Non-Road Worthy Mobile Machinery (NRMM) on the roads. However, the government said it would not allow other gaseous fuels or retrofitted machinery at this stage, as these are complex areas that need more work.
• Construction output Grew by 0.4% in February, reversing a downward trend over the previous two months, according to the ONS. Overall, new work grew by 0.3%, with R&M growing by 0.5%. The mixed effects of the weather – with rain and cold temperatures at the start of the month, followed by more settled conditions later in February – contributed to the rise. Furthermore, experts have said that the figures showed the government’s recent announcements on planning and housebuilding had given developers the confidence to push forward with projects.
• Non-disclosure fines | Just 3% of the fines for offshore companies that have failed to comply with transparency legislation have been collected. The penalties were brought in during 2022 to help the government reduce oligarchs and other kleptocrats owning British property through offshore vehicles.

Global economy

• China’s exports Increased last month as companies pushed shipments before Donald Trump’s “Liberation Day” tariffs. Exports rose by 12.4% compared to March 2024. An additional US tariff of 20% had already been imposed in March.
• China employment | Chinese authorities are encouraging young people to forego a degree at college and attend a vocational school instead. Three-year vocational courses develop skills for machinery technicians and operators, robotics engineers, and nurses, amongst other jobs. The country suffers from an increasing pool of university graduates who cannot find a job, and 1 in 6 youths are unemployed. Only 45% of university leavers in 2024 had been offered a job by April, while the figure was higher at 57% for vocational course leavers.

UK economy

• Economic improvement | Britain’s economy grew by more than expected in February, ahead of an expected slump caused by US tariffs. According to the ONS, GDP grew by 0.5%, while economists had expected a 0.1% increase. Factory activity showed a strong turnaround, with production output growth of 1.5% in February after a fall of 0.5% in January. The construction industry also grew by 0.4%, recovering from a 0.3% fall in January, while the service sector grew by 0.3% in February, up from 0.1% in January. However, it’s important to note that these growth figures predate the recent upheaval caused by US tariffs, as well as the recent tax rises for companies and large increases in water, energy, council tax, and other consumer bills that took effect in April, which could further hamper economic growth.
• Trade deals | The UK and India have agreed on 90% of a free trade agreement. At a briefing with UK negotiators from the trade department last Tuesday, businesses were told that 90% of the deal had been agreed and that some of the outstanding issues related to whiskey, cars, and pharmaceuticals. The eventual deal could mean substantial tariff reductions on whiskey and car exports to India, helping two sectors of the UK economy that are exposed to US tariffs. India has been asking for an exemption from the UK CBAM. Any such exemption would be controversial because the tax is designed to support UK steel producers by levelling the playing field with countries that have a lower or no carbon levy.
• Civil Service | The Cabinet Office will lose almost a third of its staff. Almost 1,200 jobs will be lost through redundancies as leavers are not replaced. An additional 900 will be transferred to other departments. It follows Prime Minister Sir Keir Starmer’s pledge to cut the cost of bureaucracy by reducing the size of the Civil Service and creating a more “agile” and productive state. The 2,100 jobs represent just under a third of “core staff” at the Cabinet Office.
• Jobseekers | The Recruitment and Employment Confederation reported that its measure of staff availability rose in March at a pace last seen in December 2020, driven by higher redundancies and fewer job postings.

Materials and commodities

• Steel | The UK Parliament was recalled for a rare Saturday sitting over its Easter break (the first instance since the Falklands War) to address the potential nationalisation of British Steel, specifically to protect the Scunthorpe plant as the UK’s last virgin production plant. After rescue talks with Chinese owner Jingye broke down, it was believed that there was an intention to stop the supply of raw materials and cool the blast furnaces, which is deemed an irreversible step. The Steel Industry (Special Measures) Bill gives the UK government the power to direct British Steel staff to order the materials and keep the plant operational. The Bill also means that the UK taxpayer will pick up the cost to keep the plant running, which is estimated to cost £700,000 a day. The government had earmarked £2.5bn for growing UK steel, but this was not one of the anticipated measures. Many believe this could set British Steel on the path to nationalisation.
• Oil prices Fell to the lowest level in four years, as the recent escalation in the trade war between the US and China is expected to reduce demand in the world’s two largest economies, and as OPEC+ voted to increase production by 411 thousand barrels per day in May. The low oil prices are expected to affect US oil producers; Rystad Energy stated that US shale producers face break-even costs of $62 a barrel of WTI when debt servicing and dividend payments are included.
• Batteries | Ofgem is launching a new funding scheme to reduce the risk in the development of large-scale storage projects. The new funding scheme hopes to create confidence for investors to support new projects such as super-batteries capable of storing extra electricity from renewables, reducing the need to turn to fossil fuels. Officials hope to make it easier to attract investment with the so-called cap-and-floor financing scheme. The model guarantees a minimum income for companies that want to develop the projects in return for a cap on how much revenue they can generate from the sites. The first window for developers to apply for the scheme is open, and Ofgem expects the first batch of projects to be agreed in the first half of 2026.
• Cement | Heidelberg Materials UK has secured planning permission to build a carbon capture facility at its Padeswood cement works in Flintshire, North Wales, which will capture up to 800,000 tonnes of carbon dioxide a year from the existing cement works. The captured emissions will be transported via the Hynet Northwest pipeline and stored under the seabed in Liverpool Bay. The carbon capture and storage (CCS) facility is expected to be operational in 2029, producing evoZero cement – claimed by Heidelberg to be the world’s first carbon-captured net zero product. The project aims to create around 50 permanent jobs and support up to 500 construction roles.
• Bricks | Deliveries increased by 22.6% compared with the same month in 2024, according to the latest monthly Building Materials and Component report from the Department of Business and Trade. Last month, it reported a 1% increase in construction material imports during 2024, while exports dipped by 0.4%. The delivery of concrete blocks rose by 2.6% over the same period.

Environment

• Arctic sea ice coverage saw its lowest maximum extent in its 74-year record of satellite monitoring. The region is expected to be ice-free during summer within a decade, which opens new shipping routes and shows that the Arctic is warming at a rate of up to four times the rate of the rest of the planet.
• Net-zero | Small-scale car manufacturers will no longer be required to phase out the sale of petrol and diesel vehicles by 2030. Other changes to the mandate include the ban on new petrol and diesel vans, which will move from 2030 to 2035, and all forms of hybrid cars, not just plug-in hybrids, will be available until 2035. The tweaks will also allow firms to miss their annual targets to sell a fixed proportion of electric cars, provided they make up the difference in later years.

Tariffs

“Liberation Day” was fairly rapidly followed by a 90-day reprieve as the US administration aims to achieve 90 deals in 90 days. The trade war between China and the US has escalated, with the US imposing a 145% tariff on Chinese goods and China retaliating with a 125% tariff; however, the US later excluded smartphones and other electronics. China has warned that it will ignore further tariffs, as it is already impossible for the US market to accept the increased cost of imports.

We created an initial overview of the situation last week (available here), however the situation continues to evolve.

• The UK suspended import tariffs on 89 products (including pasta, plastics, and plywood) and increased the government-backed finance facility for exporters to help ease the strain on businesses.
• Dumping concerns | British retailers have flagged signs of goods being diverted from the US to Europe through platforms such as Temu, Shein and Amazon.