Subdued outlooks

Economic Week In Review | Issue 524 | 13 April 2026

UK construction and property

  • House prices | UK house prices fell by 0.5% in March, undoing the gains recorded in February. This change was driven by uncertainty related to the Middle East conflict, which contributed to higher energy costs and increased mortgage rates, ultimately decreasing demand in the housing market, as reported by Halifax. The average UK property price dropped to £299,677, and the pace of annual house price growth has slowed. This decline underscores mounting concerns about rising inflation and interest rates. Mortgage rates have climbed sharply, with the average two-year fixed mortgage rate increasing from 4.83% at the start of March to 5.90%, its highest level since July 2024.
  • Construction administrations | In March 2026, 36 construction firms went into administration, up from 22 in February and five more than March 2025. Experts link this rise to tough conditions, including supply-chain issues, low housing demand, and high labour costs.
  • Construction activity continued to decline, yet the PMI rose slightly to 45.6 in March from 44.5 in February but still staying below the 50 threshold that signals growth. This is now the 15th straight month of reduced activity. According to S&P Global, clients are showing greater caution due to ongoing geopolitical uncertainty, leading many to delay or scale back projects, and lower volumes of new work have been reported every month since January 2025. In March, 48% of survey respondents noted higher costs, mainly due to increased prices for fuel, transport, and raw materials. The decrease in March reversed the improvements in business optimism that had followed the Autumn Budget, as companies pointed to inflation, elevated borrowing costs, and weak economic prospects.

 

Global economy

  • Financial assistance | The IMF is preparing financial assistance of up to £37bn for countries significantly impacted by the conflict in the Middle East. Additionally, the IMF has indicated that it will lower its economic growth forecasts in the upcoming World Economic Outlook. Even in a hopeful scenario where the conflict subsides quickly, ongoing infrastructure damage, supply chain issues, and reduced confidence mean that a swift return to pre-war economic conditions is unlikely, and growth will remain slower than before the conflict. The IMF projects that affected countries may require between £15bn, if a ceasefire is maintained, and £27bn if the situation deteriorates further, emphasizing that the fund has sufficient resources to meet these needs.
  • US inflation surged in March 2026, reaching its highest point in almost two years, as rising energy costs impacted consumer expenses. Consumer prices climbed 3.3% year-on-year in March, up from 2.4% in February, representing the largest monthly increase since 2022. The primary factor behind this rise was fuel costs, with petrol prices soaring by 21.2% in just one month—the biggest jump recorded since 1967. While headline inflation is being driven by the current energy shocks, core inflation, which excludes food and energy, increased by a more moderate 2.6%.

UK economy

  • Defence spending | According to analysis by EY, increasing UK defence spending could raise GDP by 0.8% and add £30bn yearly by 2045. With 69% of MoD private-sector spending staying in the UK, domestic supply chains benefit instead of flowing overseas. Nearly one-third of the MoD budget goes to infrastructure, equipment, and technology rather than short-term operational costs. This focus enables defence spending to support manufacturing and industrial capacity and drive productivity gains.
  • UK growth | S&P anticipates that UK real GDP growth will slow to 1.1% in 2026, compared to 1.4% in 2025, as higher oil, gas, and input prices put pressure on households and businesses. Growth is expected to pick up again from 2027, averaging about 1.4% between 2027 and 2029, as disruptions in the energy market are likely to subside. While energy prices continue to drive up costs, S&P projects inflation will average 2.4% in 2026, down from 3.4% in 2025. This reflects slower wage growth, a softer labour market, and the impact of the energy price cap.

Materials and commodities

  • Petrol and diesel prices in the UK have continued to rise as uncertainty persists over the US-Iran ceasefire. According to the RAC, the average price of petrol rose to 158.03p per litre and diesel to 191.11p per litre, making a full tank of petrol £13.86 more expensive and a tank of diesel £26.80 more expensive than at the start of the conflict.
  • LNG | Europe sharply increased its imports of Russian LNG in early 2026. During Q1 2026, European buyers purchased 97% of LNG produced at Novatek’s Yamal LNG plant in Siberia. The cost of these imports in Q1 ran to around €2.88bn, inflated by surging gas prices cause by disruptions in energy flows. The surge comes just ahead of the EU’s phased ban on Russian gas. From 25 April 2026, EU buyers will be barred from purchasing Russian LNG on spot contracts, with a full ban on LNG imports from January 2027 and a ban on pipeline gas from autumn 2027.
  • Copper | China’s refined copper imports have seen a significant decrease, altering global copper markets and lessening the effect of elevated prices. In early 2026, these imports fell by 25% compared to the previous year, while Chinese smelter exports increased notably. As a result, China’s demand weakened and global inventories grew, with LME copper stocks climbing past their 2018 peak and reaching levels not observed since 2013.
  • Oil prices jumped over 7%, climbing back above $100 a barrel on Monday after US President Donald Trump directed the closure of Iranian ports in response to unsuccessful peace talks between Washington and Tehran. The breakdown in negotiations has heightened worries that the worldwide energy crisis may worsen.

Environment

  • Steel emissions | India intends to lower carbon emissions from its steel industry by approximately 25% over the next decade, targeting an emission intensity of 2 tonnes of CO2 per tonne of finished steel by 2035-36. This is a reduction from the current level of about 2.65 tonnes, which is around 32% above the global average, as outlined in India’s proposed National Steel Policy Plan. While focusing on reducing emissions, India also intends to increase crude steel capacity to 400 million metric tonnes by 2035-36, up from the current 168 million tonnes, and plans to more than double steel exports to 20 million tonnes.
  • Climate change | According to recent data from the Copernicus Climate Change Service, March 2026 ranked as the fourth-warmest March ever recorded worldwide. This underscores the ongoing pattern of elevated global temperatures caused by climate change. The findings from Copernicus show that unusually high global temperatures are becoming more common, emphasizing the urgent need to speed up decarbonisation as a critical climate and economic priority.

 

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,600.53 1.57 32.90
FTSE 250 22,351.02 3.27 20.72
Nikkei 56,924.11 7.15 69.49
CSI 300 4,636.57 4.41 23.62
S&P 500 6,816.89 3.56 27.10
Nasdaq 22,902.89 4.68 36.94
CAC 40 8,259.60 3.73 16.25
Dax 23,803.95 2.74 13.76
$ per £ 1.3400 1.40 2.99
€ per £ 1.1400 0.23 -0.27
Gold £/oz 3,525.09 -0.55 42.43
Brent Oil $/barrel 95.20 -12.68 47.00

Weekly Summary

US headline inflation for March has climbed to its highest level in two years, driven by the ongoing conflict in the Middle East. This significant increase in inflation could serve as a caution for the UK ahead of the release of its own March inflation data later this month with the IMF stating pre-war economic conditions is unlikely to swiftly return even in the most optimistic scenario ahead of its upcoming World Economic Outlook.

In the construction industry, activity has declined for the fifteenth consecutive month, influenced by growing geopolitical uncertainty, higher input costs, transportation delays, and ongoing supply chain challenges reversing the improved business and investment confidence that had followed the autumn budget.

 

 

Author contact

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

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