A new normal

Economic Week In Review | Issue 488 | 14 July 2025

UK construction and property

  • Disputes | The Construction Leadership Council has become the latest signatory of the Conflict Avoidance Coalition, which was established in 2018. The Coalition brings together 90 professional and industry bodies, with almost 600 signatories committing to early intervention and collaborative working.
  • Skills and training | The Construction Industry Training Board launched a digital platform to connect employers and jobseekers across England, Scotland, and Wales. It says that the new platform would “help people understand the breadth of opportunity in construction and make it easier to engage with employers.”
  • Building costs | The BCIS expects building and tender costs to rise as labour costs continue to push up prices, with the recent increases in employers’ NIC and the National Living Wage expected to push up labour costs by around 16% by 2030. The BCIS estimates that tender costs will ramp up by 15% by 2030, while building costs will increase by 14%. Over the same period, construction work is also expected to increase by 18%.
  • Housing starts have increased by 76% in Q2 compared to Q1, according to Glenigan. Private housing starts leapt by 95% in the latest quarter, while social housing starts rose by 11%.
  • Office utilisation | A new report by the British Council for Offices (BCO) states that office utilisation has stabilised at 66%, significantly lower than before the pandemic. The commercial development sector had long held to a benchmark of 80% for office space utilisation; however, occupancy rates were disrupted by Covid and the move towards flexible working.
  • Construction output slipped by 0.6% in May, following three months of growth. Drops were seen in five out of nine sectors, with the largest falls occurring in non-housing R&M, down 2.4%, and private housing repairs, which dropped by 1.8%.
  • Digger dumping | The Trade Remedies Authority has begun a reconsideration of its recommendation that certain imports of excavators from China should be subject to anti-dumping measures. The tariffs came into effect in May. Caterpillar and LiuGong have asked for a new injury tariff calculation and an exemption for battery electric machines as no UK equivalent exists.

Global economy

  • Tariff delays | Steep tariff increases, which were set to come into effect last week as President Trump’s pause ended, have been further delayed until the 1st of August to allow more time for countries to agree on deals.
  • Global supply chain | The Q2 2025 CIPS pulse survey reveals rising concerns for short-term and 12-month outlooks, with many sectors expecting double-digit price increases and heightened supply risks. Supply chain disruptions are at their highest level due to trade tensions and instability in the Middle East. More categories are anticipated to see input price hikes above 10%, particularly in shipping and logistics, which remain the most vulnerable. Procurement leaders are concentrating on diversification, stockpiling, and contract strategies; however, confidence is waning.

UK economy

  • Debt | The Office for Budget Responsibility (OBR) new report on the vulnerability of public finances warned that the UK’s debt-to-GDP ratio is set to increase from 94% today to 270% in the early 2070s. The OBR attributed the debt rise to the reversal of planned tax rises and lower-than-expected planned spending reductions, along with the cost of the state pension, which has increased since the 1950s, when it cost around 2% of GDP. It is set to rise to 7.7% of GDP by the 2070s.
  • Economy | According to the ONS, the UK economy shrank by 0.1% in May after also shrinking in April. The fall was mostly driven by manufacturing, while retail sales were also “very weak.” This is in stark contrast to the 0.7% growth seen in the first three months, making it the fastest-growing G7 nation, as growth was supported by exports.
  • Foreign investment | Deloitte’s survey of UK CFOs revealed that a net balance of +2% found the US attractive for investment, down from +59% in late 2024. This decline coincided with a sharp drop in FDI in early 2025 due to uncertainty over Trump’s tariff plans. Meanwhile, UK market attractiveness rose to +13% from -12%, ranking it alongside India. Although the US is still preferred over Europe and China, eurozone investor sentiment improved unexpectedly in July, reaching a three-year high, according to the Sentix index.

Materials, commodities and currencies

  • US copper prices hit record highs following a new 50% import tax on copper starting August 1, as announced by President Trump. The US Geological Survey reported imports of 810,000 metric tons last year, about half of total consumption, with Chile and Canada as the top suppliers.
  • Steel rescue | Speciality Steel UK (SSUK) could need government support if its parent company, Liberty Steel, falls into administration this week following a court case. The company employs 1,450 people. The plant has not produced steel for many months because of a lack of funds to buy raw materials. Staff have been furloughed on 85% of their salaries. SSUK supplies aerospace and defence companies and operates an electric arc furnace.
  • Biodiesel | Greenergy will begin a consultation with employees to close its plant in Immingham, in northeast England. It will cause the loss of 60 jobs. The plant supplies nearly a quarter of all UK biodiesel production but has been struggling recently with a lack of government mandate and rising competition form the US.
  • Oil | OPEC’s 2025 World Oil Outlook, suggests global demand for oil will rise to 105 million barrels per day (bpd) this year, 106.3 million bpd in 2026 and reach 111.6 million bpd by 2029 with growth driven by developing countries. In the short-term OPEC+ will increase production and fully unwind its 2.2 million bpd production cuts by September 2025, much faster than originally scheduled.

Environment

  • Hosepipe ban | Yorkshire is the first UK county to face restrictions on water usage amid an extended dry spell of dry weather nationwide. The region has experienced its driest and warmest spring on record, with only 15 cm of rainfall between February and June – less than half of what would be expected in an average year. Nationally, England recorded its warmest June on record after the driest spring for 132 years.
  • New normal | The Met Office has said that extreme weather is the UK’s new normal, and its climate is now “notably different” to just a few decades ago. The UK state of the Climate Report found the UK has warmed at a rate of approximately 0.25 degrees Celsius per decade since the 1980s, with the most recent decade (2015-2024) 1.24 degrees Celsius warmer than 1961-1990.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 8,941.12 1.34 8.34
FTSE 250 21,613.25 0.26 1.94
Nikkei 39,569.68 -0.61 -3.94
CSI 300 4,014.81 0.82 15.62
S&P 500 6,259.75 -0.31 11.48
Nasdaq 20,585.53 -0.08 11.89
CAC 40 7,829.29 1.73 1.36
Dax 24,255.31 1.97 29.37
$ per £ 1.3502 -1.04 3.99
€ per £ 1.1544 -0.34 -3.07
Gold £/oz 2,486.43 1.64 33.91
Brent Oil $/barrel 70.36 2.27 -17.25

Weekly Summary

The idea of a “new normal” features in two significant news stories, both with repercussions for how we in the construction industry do business. The BCO suggests that we have seen a fundamental shift in how office spaces are used, which has implications for how we design workspaces to be smarter and more agile, with the study’s author suggesting an opportunity to create spaces that reflect how people work. Meanwhile, the Met Office’s warning that extreme weather events are to become more commonplace could usher in greater climate adaptation in our urban environments.

Author contact

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

Related reviews

Website &AGENCY