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Economic Week In Review | Issue 483 | 9 June 2025

UK construction and property

  • Insolvencies in the construction industry rose by a third when compared to a month earlier, almost a fifth higher than a year earlier, according to data from Creditsafe.
  • Ethical workforce standard | The Workforce Assured Scheme, a new workforce standard that aims to tackle modern slavery, exploitation, and tax avoidance, has been backed by contractors. To gain accreditation, companies must undergo a detailed third-party audit of practices such as wages, wellbeing, employment terms, and safeguarding rules.
  • Solar panel rules | Changes to building regulations will require almost all new homes in England to have a minimum level of solar panels from next year. The changes will form part of the Future Homes Standard, which will be published this autumn. There will be some flexibility for sites where solar power is inappropriate due to shading or other constraints. The change replaces proposals made in 2023 that would have allowed developers to omit solar panels altogether if 40% of roof area coverage was not feasible.
  • Activity | S&P Global’s latest UK Construction Purchasing Managers Index (PMI) reported that the activity index in May rose to 47.9, up from 46.6 in April, signalling the slowest reduction in output volumes since January but still below the neutral 50 mark. Employment remained a weak spot, with job losses increasing at the fastest rate since August 2020. Despite this, Glenigan’s forecast—which focuses on the three months to the end of May—found a 25% increase in project starts compared to the previous three-month period, suggesting a brighter outlook for business activity.
  • Housing | The latest Housing Pipeline Report from the Home Builders Federation found that the number of residential units approved in Q1 2025 fell by 45%, and by 32% when compared to a year earlier. Just 43,893 units were approved, the lowest quarterly total since Q2 2012. It also found that the average time to finalise Section 106 payments has increased by 20% in two years, to 515 days. However, some agreements have taken more than 12 months to complete, with lack of capacity at local authorities thought to be a contributing factor as 80% of Local Planning Authorities now operating below full capacity.
  • Transport funding | In excess of £15 billion is expected to be spent on transport projects across the North, Midlands, and Southwest. £2.5 billion will be injected into projects in Manchester, including improvements to its Metrolink tram network. The West Midlands has been promised £2.4 billion for an extension of its metro system to East Birmingham to regenerate the city’s Sports Quarter. A further £2.1 billion will go to West Yorkshire to start building a mass transit programme in the region, expecting the first trams to be up and running by the mid-2030s. In the East Midlands, £2 billion will be invested in a new mass transit system connecting Derby and Nottingham. The move followed an overhaul of Treasury rules earlier this year to ensure public funding is distributed fairly.

Global economy

  • Tax in Germany | Germany’s government has proposed tax breaks to boost investment. Under the plan, Germany’s corporate tax rate would fall from its current rate of 15% by 1% a year from 2028 to reach 10%. Companies would also be able to deduct 30% of the cost of new machinery and equipment from their tax bill between 2025 and 2027, and electric car companies would see preferential tax treatment.
  • Global growth | According to the OECD, the outlook for the global economy is slowing more than expected and is on course for 2.9% growth in 2025 and 2026 (a reduction from forecasts of 3.1% and 3.0%). However, the OECD warned that the growth outlook would likely be even weaker if protectionism increases, fuelling future inflation, disrupting supply chains, and unsettling financial markets. The OECD also forecasted that the US economy will grow by just 1.6% this year and 1.5% next year.
  • Europe’s interest rates | The European Central Bank (ECB) has cut interest rates for the eighth time this year, acknowledging that inflation is under control, but economic prospects are more pessimistic due to tariff risks. The ECB’s key rate was lowered from 2.25% to 2.0%, the middle of the range that the bank sees as “neutral” – neither supporting nor restraining the economy.

UK economy

  • UK growth | The OECD has revised its growth expectations for the UK for this year and the next, downgrading them from its earlier forecast in March. The projection for 2025 has been reduced from 1.4% to 1.3%, while the estimate for next year has decreased from 1.2% to 1%. This downgrade is attributed to worries about President Trump’s trade war, as well as limitations on Whitehall spending and inflation rates that were higher than anticipated.
  • Spending | The Strategic Defence Review (SDR) made a series of recommendations to prepare the UK’s armed forces for modern warfare. The total cost of the recommendations amounts to almost £68 billion. The report covers smarter technology, not just an increase in numbers; a digital targeting platform; and the creation of a national cyber and electronic warfare command.
  • M&A deals | The value of merger and acquisition transactions in the UK has reached a two-year peak. This increase was partially fuelled by a rise in deals made by international investors and firms acquiring UK-based companies during the first quarter of the year. Recent data indicated that foreign companies’ acquisitions of UK firms amounted to £19.2 billion in Q1, up from £15.2 billion in the prior quarter.

Materials, commodities and currencies

  • Exchange rates | Last week, the British pound headed back towards its highest level in three years against the dollar amid growing worries over the effect of Donald Trump’s trade policies. Sterling climbed 0.7% against the dollar to $1.356.
  • Critical minerals | The EU announced 13 new raw material projects outside the bloc to increase its supplies of metals and minerals to support its push towards defence, aerospace, and the energy transition, as well as reducing its dependency on China following its decision in April to impose export curbs on rare earth magnets until new licences are obtained. The EU’s list is part of the implementation of the Critical Raw Materials Act agreed in 2023, under which the bloc aims to mine 10%, process 40%, and recycle 25% of its needs by 2030.
  • Bricks | Supplies of bricks and concrete blocks to the construction industry have increased by more than 10% compared with a year ago and by 5.2% when compared to March’s figure. According to the Minerals Product Association (MPA), the increase in brick deliveries aligns with its latest figures, which tentatively suggest a recovery in housing, with mortar sales up for a fourth consecutive quarter in Q1 2025.
  • Construction waste | Construction data platform Qflow found that 91% of construction material delivery and waste removal records fail to meet quality standards, with only 34% being accurate enough to support embodied carbon calculations. Based on six years of analysis covering over one million deliveries and removals, the study found that 95% of product delivery records contain major issues – from missing weights to incorrect supplier IDs – leaving project teams without the verified data required for compliance and carbon reporting. The report warned that poor documentation could hinder progress through Gateway 3, where verified material data is essential.
  • Steel | The UK will be spared from the increased US import tariffs of 50% on steel and aluminium, but will have just five weeks to finalize a full exemption under the outline trade agreement. Negotiations with the US are still ongoing, which means that the increased levy will not apply unless the negotiations fail to conclude by 9th July.

Environment

  • Environmental laws | A new law intended to protect nature and reverse the loss of wildlife has been proposed by the Welsh Government. If passed, it will allow members of the public to challenge organizations in Wales on environmental issues such as water pollution. Public bodies will also be forced to publish nature recovery plans, with targets set by the Welsh Government. Wales is currently the only part of the UK that doesn’t have a public body that holds governments and other public authorities accountable for their environmental responsibilities.
  • Climate resilience | The UK and the Association of Southeast Asian Nations (ASEAN) launched the Supporting Socially Inclusive Climate Adaptation & Resilience in ASEAN (CLARE-ASEAN) initiative last week in Jakarta. It focuses on using new evidence and innovation to promote socially inclusive urban resilience to climate change in the Southeast Asia region. CLARE-ASEAN will focus on co-developing climate solutions with marginalized communities, producing tailored research and policy briefs to support ASEAN decision-making, and contributing to the forthcoming IPCC Special Report on Climate Change and Cities.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 8,815.07 0.49 6.91
FTSE 250 21,157.28 0.61 2.93
Nikkei 37,741.61 -0.59 -2.44
CSI 300 3,873.98 0.88 8.39
S&P 500 6,000.36 1.50 12.22
Nasdaq 19,529.95 2.18 13.99
CAC 40 7,804.87 0.68 -2.46
Dax 24,304.46 1.28 30.97
$ per £ 1.3531 0.47 6.33
€ per £ 1.1872 0.02 0.82
Gold £/oz 2,447.18 0.10 35.71
Brent Oil $/barrel 66.47 5.88 -16.52

Weekly Summary

News that the UK’s economy is expected to grow more slowly than anticipated, as a result of increased headwinds from tariffs, and that construction output is expected to be less optimistic, has placed greater focus on this week’s Spending Review and the Sector Plans, which are expected to accompany it to support the 10-year Industrial Strategy. However, the plan needs to provide support to alleviate some of the pressures in the system, such as labour, which may be further impacted by recent changes to the immigration system.

Author contact

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

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