The cost of disruption

Economic Week In Review | Issue 519 | 09 March 2026

UK construction and property

  • Construction PMI | The UK construction sector continued contracting for the 14th consecutive month in February 2026, according to the latest S&P Global Purchasing Managers’ Index (PMI). PMI fell from 46.4 in January to 44.5 in February, signalling a faster rate of decline. Key drivers of the downturn included weak demand with firms reporting soft order books, a lack of new project starts and weather disruptions delaying work starts. The residential sector was the worst- performing subsector with commercial construction also declining more sharply than earlier in the year.
  • Construction administrations | New data from Creditsafe shows that 22 UK construction firms entered administration in February 2026, marking the lowest February figure since 2021. This also represents a one-third reduction compared with February 2025, when 32 firms collapsed.
  • Funding cycles | Councils across England report that inflation, market volatility, shifting government policies are creating a “stop-start” funding cycle that is disrupting major public construction projects. According to a survey by Scape and the Local Government Information Unit (LGIU), these factors – combined with skills shortages both in-house and among subcontractors – were viewed as the biggest constraints on delivering large infrastructure schemes. Respondents identified long-term frameworks with trusted contractors as the most effective ways to build resilience and improve delivery outcomes.

 

Global economy

  • Tariff refunds | The US Court of International Trade has ordered Customs and Border Protection to issue refunds for levies US President Donald Trump introduced last year under the International Emergency Powers Act (IEEPA).
  • US economy | The number of jobs in the US economy fell by 92,000 last month, an unexpected contraction that has renewed questions about whether the labour market in the US might be starting to crack. The unemployment rate ticked up to 4.4%. It marked the biggest monthly job loss since October, when the US government shut down, and has come amid concerns that a jump in oil prices sparked by the US-Israel war in Iran could threaten growth.
  • China growth | China has announced its lowest economic growth target since 1991, aiming for 4.5% to 5% GDP growth for 2026. This marks the weakest target in 35 years and reflects a clear acknowledgement of China’s slowing economy, driven by a prolonged property sector slump, industrial overcapacity, weak consumer confidence, youth unemployment and rising geopolitical uncertainty.

UK economy

  • Energy deals | Energy suppliers in the UK are pulling a raft of fixed-price tariffs from the market following a spike in oil and gas prices caused by the US-Israel war with Iran. The number of fixed deal available has more than halved and those remaining have jumped in price.
  • Spring statement | The Spring Statement offered an updated view of the UK’s economic outlook at a time of heightened global uncertainty. While it outlines broadly improving forecasts for inflation, borrowing, and investment, the Office for Budget Responsibility (OBR) stresses that its projections were finalised before the recent surge in energy prices driven by escalating conflict in the Middle East. As a result, the figures do not yet reflect the potential economic impact of these events, which the OBR warns could be significant for both the UK and the global economy. As planned, the Chancellor has held back major tax and spending decisions until the Autumn Budget, instead using the Spring Statement to reaffirm core priorities and signal areas where further reform and support will follow.

Materials and commodities

  • Bricks | The UK government’s latest construction-materials statistics show a mixed picture for early 2026, with material prices rising and deliveries of key products declining, reflecting ongoing supply-chain pressures and weak housebuilding activity. Deliveries of bricks and blocks fell by 2.5% and 5.7% respectively in January this year compared with January 2025. Brick and block deliveries were down year-on-year due to unusually strong deliveries due to a temporary housebuilding rebound a year ago coupled with an extremely wet start to this year, disrupting site starts.
  • Steel | A panel at the Make UK conference in London warned that UK-produced steel is increasingly being excluded from public and private infrastructure projects due to overly narrow low-carbon procurement specifications. These criteria typically favour electric-arc furnace steel – often imported – while disregarding domestic steelmakers currently transitioning from blast furnace production to lower carbon methods.
  • Oil prices | Oil prices have surpassed $100 for the first time since 2022, as the war in the Middle East enters a 10th day. Kuwait has begun cutting production at some oil fields after running out of room to store its bottled-up crude, suggesting the region is entering a broader storage crisis, in which a lack of storage leads to shutdowns, because tankers are reluctant to risk travelling through the strait of Hormuz.
  • Gas prices | The benchmark UK gas price jumped to 158p per therm this morning. For context, the price was below 80p before the war started less than two weeks ago. However, these prices are still below levels following the Russian invasion of Ukraine in 2022 where UK gas prices surged to well over 600p per therm. If gas prices stay high, this could translate to a higher price cap for the summer.

Environment

  • Climate aid | The UK government has sharply reduced funding for climate-related aid programmes in developing countries. This follows earlier reporting that the UK plans to reduce its broader climate finance commitment from £11.6bn over the previous five years to £9bn in the next five years contradicting an international pledge by developed countries, including the UK, to triple global international climate finance spending to $300bn a year by 2035.
  • Climate targets | China has announced a new set of climate and energy transition goals as part of its latest five-year plan with some analysts saying the targets are notably cautious relative to previous climate ambitions. Key targets include a 17% reduction in CO₂ emissions by 2030 and an aim for 25% of total energy consumption to come from non-fossil sources by 2030 up form the current 15%. The plan also seeks to peak coal consumption; a softer stance compared with China’s previous 2021 pledge to phase down coal between 2026-2030. The new goals are less ambitious than China’s 2035 target set last year to reduce absolute emissions by 7-10% from their peak – China’s first-ever absolute emissions reduction goal.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,284.75 -5.74 18.49
FTSE 250 22,500.95 -5.29 11.78
Nikkei 55,620.84 -5.49 50.21
CSI 300 4,660.44 -1.07 18.17
S&P 500 6,740.02 -2.02 16.81
Nasdaq 22,387.68 -1.32 23.03
CAC 40 7,993.49 -6.84 -1.57
Dax 23,591.03 -6.70 3.35
$ per £ 1.3334 -0.57 3.26
€ per £ 1.1541 0.85 -2.97
Gold £/oz 3,855.33 -1.53 71.13
Brent Oil $/barrel 92.69 28.02 31.74

Weekly Summary

Geopolitical uncertainty, trade uncertainty and weak growth continue to be on the forefront of headlines this week. Oil and gas prices have risen to heights not seen since 2022 as the war in the Middle East enters a tenth day. For the construction sector, a prolonged war means increased uncertainty and the potential for higher material prices particularly affecting energy intensive industries like steel and aluminium.

Closer to home, this week’s Spring Statement outlined broadly improving forecasts for inflation, borrowing and investment. However, these projections were finalised before the recent surge in energy prices and therefore have not considered the potential economic impact of these events. This will not help with confidence particularly in the construction industry which, in February experienced its 14th consecutive month of contracting.

Author contact

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

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