Stagnant Growth?

Economic Week In Review | Issue 520 | 16 March 2026

UK construction and property

  • UK construction output rose by 0.2% in January 2026, largely driven by repair and maintenance activity. New work fell by 2% compared with December, highlighting continued weakness in project starts. Over the three months to January total construction output fell by 2% with new work falling by 3.2%, reflecting subdued investor confidence.
  • National Infrastructure Pipeline | The UK government has expanded its 10-year National Infrastructure Pipeline, adding £188bn in new planned investment and introducing skilled-demand data for the first time. The update brings the total pipeline value to £718bn, up from £530bn, covering both public and private sector projects. The expanded pipeline aims to provide greater visibility for contractors, clients and suppliers as well as support long-term skills planning.
  • Scaffolding | According to new findings by the National Access & Scaffolding Confederation (NASC), the trade body expects almost 6000 vacancies alone this year. When factoring in retirements and staff turnover that quickly rises to 40,000 roles that need to be filled with the report warning that 7% of the workforce is expected to retire in the next four years, adding further pressure on the sector. While training and education remain the long-term solution the report suggests more short-term flexibility in migration policy so experienced scaffolders for overseas can help bridge the gap while the domestic pipeline grows.
  • Productivity | A new RICS survey has revealed major gaps in how UK construction firms track and understand productivity. The survey revealed that 22% of UK construction companies having never measured productivity, the highest rate among five global regions (UK, Europe, Americas, APAC, MEA). The low productivity measurement rate was a result of different factors, including the absence of a common productivity definition and the UK having a higher share of smaller firms with limited resources to track complex metrics.

 

Global economy

  • US economy | The US economy grew by 0.7% in Q4 of last year – down from the initially reported 1.4%, and a much slower pace of growth than the 4.4% in Q3. This slowdown reflects declines in exports, consumer spending, and government expenditure, according to the Commerce Department. Meanwhile, the US labour market remains shaky, with employers cutting 92,000 jobs in February and unemployment rising to 4.4%.
  • German exports | Germany’s export sector started 2026 with a slowdown. Exports fell 2.3% in January compared to December, totalling €130.5bn. The decline was driven mainly by weaker trade with the EU and a sharp 13% drop in exports to China. By contrast, shipments to the US, Germany’s largest export destination, provided a positive offset – rising sharply by 11.7% to €13.2bn.
  • China trade | China began 2026 with an exceptionally strong trade performance, recording its fastest export growth in four years. Exports surged 21.8% year-on-year during the combined January-February period sharply higher than the 5.5% growth seen in 2025. This increase was seen despite an 11% fall year-on-year fall in exports to the US. Growth continued to be powered by China’s dominant sectors: semi-conductors, automobiles, ships and high-tech exports. Crucially, value growth outpaced volume growth, suggesting China is exporting these products at higher prices, easing fears of ultra-cheap price competition. China’s imports also rose 19.8% year-on-year, a positive sign for global trading partners.

UK economy

  • UK economy | The ONS has reported that the UK economy showed no expansion in January, down from an increase of 0.1% in December, signalling continued weakness in early 2026. The fall comes as the UK and other countries are clouded by future uncertainty because of the conflict in the Middle East. The ONS stated that services sector showed no growth in January while production fell by 0.1%. The construction sector grew by 0.2%. This all culminated in the OBR cutting its growth forecasts with the UK economy expected to grow 1.1% this year from 1.4% in its previous forecast. Over the broader three months to the end of January, growth rose by 0.2%.
  • UK exports | The value of British goods exported to the US fell by 10.3% to £59.2bn last year following the introduction of US tariffs. This marks the first fall in UK goods exported to the US since covid. The worst hit business sectors were footwear, clothing, handbags and cars.

Materials and commodities

  • Oil | The International Energy Agency (IEA) reports that despite the ongoing oil crisis, overall global supply in 2026 is still expected to grow by 1.1 mb/d, entirely from non-OPEC+ countries. Global oil supply is projected to fall by 8mb/d in March, driven mainly by Middle Eastern loses. The IEA has also revised oil demand downwards from previous reports with 2026 demand growth now revised to +640 kb/d, down from the previous +850kb/d forecast. To counteract the oil price shock seen in recent weeks IEA member countries have agreed to release 400 million barrels from emergency reserves to stabilise markets.
  • Aluminium | The owners of the UK’s only aluminium smelter, Alvance British Aluminium, have increased production by about 10% after exporting to the US for the first time. This was driven by President Trump’s steel and aluminium tariff with the UK being the only country to get a preferential lower rate of 25%. The site has a smelting capacity of 48,000 tonnes per annum with about half of the aluminium produced at the smelter being exported to the US.

Environment

  • Climate Change | February 2026 was the fifth warmest on record, reaching 1.49°C above pre-industrial trends, 0.01°C below the Paris Agreements 1.5°C threshold. The UN has cautioned the probability of keeping to the 1.5°C threshold is “virtually zero”, with the UK braced for a rise of at least 2°C within the next 25 years, meaning the UK and other regions must rapidly adapt to more volatile weather patterns.
  • Overheating | London faces growing risks of overheating in homes due to rising temperatures, dense urban development, and outdated planning rules, the London Assembly has heard. The city’s “urban heat island” effect contributed to 10% of UK wide heat-related deaths in 2022, which has prompted City Hall to draft a Heat Risk Delivery Plan. Experts say that planning guidance favours passive cooling over air conditioning with the former approach deemed unrealistic as extreme heat worsens. Designers also face conflicting regulations with the planning system pushing for daylight criteria, which means larger windows, worsening overheating and going against cooling criteria.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,261.15 -0.31 18.87
FTSE 250 22,071.10 -1.91 10.38
Nikkei 53,819.61 -3.24 46.29
CSI 300 4,669.14 0.19 16.54
S&P 500 6,632.19 -1.60 17.61
Nasdaq 22,105.36 -1.26 24.51
CAC 40 7,911.53 -1.03 -1.45
Dax 23,446.29 -0.61 2.00
$ per £ 1.3300 -0.37 2.85
€ per £ 1.1600 0.26 -2.59
Gold £/oz 3,795.60 -1.55 64.50
Brent Oil $/barrel 103.14 11.27 46.13

Weekly Summary

This week’s UK growth outlook has been weak showing no expansion in January signalling continued weakness in the economy as we draw to the end of the first quarter of 2026. The construction sector mirrored the disappointing economic outlook with new work falling by 2% in January on a monthly basis signalling continued weakness in project starts. The construction industry heavily depends on investment, confidence and long-term financing. When the wider economy stalls all three weaken at the same time.

On a more positive note, the government announcement of the expansion of the 10-year National Infrastructure Pipeline will be welcome news to the industry. The expanded pipeline will help provide greater visibility for contractors, clients and suppliers as well as support long-term skills planning.

Author contact

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

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