More resilient than expected

Economic Week In Review | Issue 529 | 18 May 2026

UK construction and property

  • Construction output increased 1.5% in March, with new work up 2% and repair & maintenance rising 0.8%. Quarterly, total new orders dropped 10.5% due to declines in private commercial and infrastructure sectors. Overall, construction output rose 0.4% quarterly, but new work fell 1.9%.
  • HSE | The Health and Safety Executive (HSE) will release clearer guidance on Construction Design and Management Regulations (CDM) 2015, clarifying principal designer roles and client responsibilities to address confusion and improve compliance, without changing the law.
  • Remediation works | The Building Remediation Bill announced in the May 2026 King’s Speech mandates fixing unsafe cladding by set deadlines: end of 2029 for buildings over 18 meters, end of 2031 for those under. It enforces strict deadlines, severe penalties, and government intervention if landlords don’t comply, strengthening building safety enforcement.
  • BSR | While BSR processing speed is faster it still exceeds the 8-week target, averaging 14.3 weeks (April 2025–March 2026), a 48% improvement from 27.5 weeks previously. Delays and financial strain persist due to incomplete applications and documentation issues. If extra information is required, processing can take an additional 7 weeks.

Global economy

  • US inflation | US prices increased in April, driven by fuel and grocery costs, raising CPI to 3.8% from 3.3% the previous month. Higher inflation reduces the chance of a Federal Reserve interest rate cut soon.
  • German manufacturing | High energy prices are hurting Germany’s heavy industry, causing a 15.2% drop in output for energy-intensive sectors (chemicals, metals, paper and glass) and a 6.3% decrease in jobs (about 53,000 lost) since February 2022. This is worse than the broader industry decline of 9.5%.
  • Strikes | Negotiations to prevent a strike at Samsung Electronics were unsuccessful this week, even with the South Korean government stepping in. The Samsung Group United Union, which represents 70,000 members, has stated they will strike for 18 days until 7 June unless the company eliminates bonus limits. The union projects that a strike could cost the company £495 million per day.

UK economy

  • UK economy | The UK economy grew 0.6% in Q1, led by a 0.8% rise in services. March saw 0.3% growth, exceeding expectations. Early-year performance was strong, but analysts expect stagnation and weak growth through summer.
  • Consumer spending | According to Barclays, consumer spending in the UK has decreased for the first time in 16 months, with card spending showing a 0.1% year-on-year drop in April 2026. This marks the first decline since November 2024.
  • UK growth forecasts | The IMF has raised the UK growth forecast to 1% for 2026 from 0.8% previously, citing strong recent performance but warns of significant downside risks, particularly from global tensions and domestic uncertainty that could reduce business investment and consumer confidence. While inflation may rise briefly, the IMF believes the UK could return to its inflation target without more rate hikes if conditions stabilize.

Materials and commodities

  • OPEC oil output dropped over 30% (9.7m bpd) since the Middle East conflict, causing supply disruptions and high prices that have limit global demand. OPEC cut its 2026 growth forecast by 200,000 bpd, while the IEA expects demand to decline by 420,000 bpd. The IEA notes rapid depletion of global inventories and predicts more price volatility during peak summer demand. Saudi Arabia, UAE, and non-OPEC producers are mitigating by rerouting exports and boosting supply.
  • UK construction material prices rose 2.6% year-on-year to March 2026, with no major spike. March was the first month that reflected the Middle East conflict impact, but price increases remain moderate and vary by material. Aggregates were up 8.4%, fabricated structural steel were up 8.2% year-on-year. Structural steel saw a 6.2% monthly rise. Rebar dropped 7.1% year-on-year; precast concrete fell 1.9% on a monthly basis.
  • Oil exports | The UAE has revealed plans to finish a second oil pipeline that will bypass the Strait of Hormuz, with completion targeted for 2027. Abu Dhabi’s leadership has accelerated the project to safeguard oil exports against geopolitical risks. This new pipeline aims to double the country’s export capacity, possibly allowing exports of up to 3.6 million barrels per day.
  • Aluminium | The World Aluminium Summit emphasized that the global aluminium market is facing a temporary supply challenge due to disruptions in the Gulf region, including the closure of key smelters and logistical setbacks. These challenges are expected to reduce capacity by approximately 3.4 million tonnes, leading to a supply gap of more than 1.4 million tonnes, with inventories already running low. As a result, prices are anticipated to rise above $4,000 per tonne over the next 12–18 months. Despite these hurdles, the long-term outlook remains positive, as new investments and projects—particularly those backed by Chinese funding and progress in the US and Europe—are set to boost production and restore market stability.

Environment

  • GCF | The UK has halved its UN Green Climate Fund (GCF) pledge from £1.62bn (2024-2027) to £815m, with £665m paid by March 2026. This change aligns with a broader move from development aid to military spending.
  • Climate ruling | UN member states will vote to back the International Court of Justice (ICJ) 2025 climate opinion, acknowledging legal duties to reduce emissions and address fossil fuels. While not binding, the vote may strengthen political support, align policies with international law, and aid climate cases and discussions.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,195.37 -0.37 17.40
FTSE 250 22,596.14 -1.11 7.74
Nikkei 61,409.29 -2.08 62.66
CSI 300 4,859.59 -0.25 24.95
S&P 500 7,408.50 0.13 24.34
Nasdaq 26,225.15 -0.08 36.51
CAC 40 7,952.55 -1.97 0.84
Dax 23,950.57 -1.59 0.77
$ per £ 1.3400 -1.70 1.01
€ per £ 1.1500 -0.56 -3.40
Gold £/oz 3,407.45 -1.47 41.26
Brent Oil $/barrel 109.26 7.87 67.04

Weekly Summary

The IMF’s growth forecast this week builds on the positive economic data released by the ONS last week. The IMF has raised its growth estimate to 1% for 2026, highlighting that the economy is demonstrating more resilience than previously expected. Furthermore, the IMF suggests the UK could reach its inflation target without needing further interest rate hikes, as long as stability improves in the Middle East. While the economy continues to show resilience, last week’s growth figures indicate signs of “front-loading” in March, meaning that businesses and consumers may have accelerated their activity ahead of anticipated supply shortages or price increases. Analysts, therefore, predict that growth will remain flat or weak during the summer months.

Last week’s construction data showed encouraging results, with output rising by 1.5% in March and 0.4% over the quarter. Despite this growth, new orders fell, indicating that the future pipeline of work may be less robust.

 

Author contact

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

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