Building on optimism

Economic Week In Review | Issue 536 | 06 July 2026

UK construction and property

  • UK construction confidence is rising, with two-thirds of firms expecting growth in the next year, driven by strong demand and infrastructure investment according to Lloyds, latest Business Barometer Survey. While optimism is up and insolvencies have declined, financial pressures and economic uncertainty persist.
  • Construction plan | Andy Burnham has outlined plans to boost UK infrastructure, launch a major council house-building program, expand devolution, and set up a “Number 10 North” HQ in Manchester. He also pledged public procurement reforms and increased support for UK industry via social-value requirements in public contracts. Experts raised concerns about funding, skills shortages, costs, and housing delivery.
  • Tender prices | The BCIS estimates building costs will rise by 13.1% and tender prices by 15.5% over the next five years to Q2 2031. New construction output is expected to drop 2.7% in 2026, then grow modestly from 2027. Rising energy and material costs persist, but weak demand has limited contractors’ ability to raise tender prices.
  • Productivity | Mace’s analysis of 234 projects found that high workforce churn reduces productivity by 8%, costing around £1.3bn yearly across the government’s major infrastructure pipeline. Projects using digital technology and Modern Methods of Construction (MMC) performed better. A 51% productivity boost could add £67bn in infrastructure and meet pipeline goals with two-thirds of the current workforce.
  • Construction fatalities | The Health & Safety executive (HSE) reported 25 construction fatalities in 2025/26, down from 35 the previous year. Despite fewer deaths, construction remained the UK’s most dangerous industry.
  • Gateway three | The Building Safety Regulator (BSR) is taking an average of 16 weeks to decide on higher-risk building gateway three approvals, twice the legal target. Of 277 applications, 124 have been decided with an 86% approval rate, mainly for refurbishments.

Global economy

  • US Jobs | The US added 57,000 jobs in June, below the 110,000 forecasts. Unemployment dropped to 4.2% mainly due to 720,000 people leaving the workforce. Wages rose 3.5% year-on-year in June, which is notably weaker than inflation at 4.2%.
  • China’s economy improved in June with stronger manufacturing and higher exports to the US, driven by the front-loading of demand before potential US tariffs. Goldman Sachs raised its Q3 GDP growth forecast to 5%, citing higher fiscal spending and lower energy costs.
  • Eurozone inflation likely eased to 2.8% in June, according to preliminary estimated from Eurostat, driven by lower energy, services, and food prices. Core inflation dropped from 2.6% to 2.4%, indicating moderating underlying inflation.

UK economy

  • Wealth loss | The UBS global wealth study shows the UK had the largest drop in personal wealth among 37 developed economies since 2020, with mean and median wealth down over 23%. High inflation and weak real estate growth drove this decline, as property values failing to keep pace with inflation in real terms. UK house prices have risen by 26% since 2020 but consumer prices increased 32%.
  • Defence Investment Plan | Outgoing Prime Minister Kier Starmer has announced a major Defence Investment Plan which will see Britain spend nearly £300 billion over four years, aiming for the UK to spend 3.5% of GDP on defence by 2035 and nearly £80 billion annually by 2029.

Materials and commodities

  • Construction materials | According to the Department for Business and Trade (DBT) brick deliveries fell 4.4% year-on-year in May 2026. Material deliveries suggest construction activity remains subdued, while higher prices particularly for steel, aggregates and road materials, continue to increase cost pressures across the industry.
  • EU Steel Quotas | The EU’s reduced steel quota regime came into effect on 1 July 2026 with the EU cutting overall tariff-free steel import quotas by about 47% compared with 2024 levels. The UK is among 13 countries with free trade agreements (FTAs) that received more favourable treatment than other exporters. Their quotas were reduced by roughly one-third rather than being subjected to the full cuts.
  • Aluminium | The market is pricing out a geopolitical risk premium as Middle East tensions subside and EGA Al Taweelah facilities return to operation faster than expected. This has reduced concerns about a near-term supply shortage and pushed aluminium prices down towards $3,065 per tonne.
  • UK diesel prices fell sharply in June 2026, with it recording its largest monthly price drop since RAC records began in 2000 falling by 16.6p from 183.75p to 177.14p. The sharp decline in crude prices contributed to the decline however, fuel prices still remain more expensive than before the Middle East crisis.

Environment

  • Climate change | A new report by Central London Forward (CLF) warns that without major adaptation, climate change could cost London up to £15 billion yearly by 2050 due to more heatwaves, floods, and droughts impacting health, infrastructure, and the economy.
  • Climate taskforce | The UK government has created a Climate Security Taskforce to address national security risks from climate change. Its goals include identifying major climate threats, reviewing and improving government resilience measures, assessing risks to essential systems and economic stability, and evaluating how global climate impacts could affect the UK.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,679.03 1.63 21.04
FTSE 250 23,538.80 1.69 9.19
Nikkei 69,744.07 0.55 75.19
CSI 300 4,842.17 -0.54 21.60
S&P 500 7,483.24 1.76 19.17
Nasdaq 25,832.67 2.12 25.39
CAC 40 8,508.07 1.47 10.55
Dax 25,779.31 4.49 8.37
$ per £ 1.3400 0.88 -2.11
€ per £ 1.1700 0.82 1.00
Gold £/oz 3,127.28 0.98 27.84
Brent Oil $/barrel 72.12 -0.66 4.83

Weekly Summary

Brick deliveries continue to decline, while the DBT material prices index for all work rose 5.4% year-on-year in May, highlighting ongoing cost pressures and weak demand. Despite this, Lloyds’ survey shows rising confidence in construction, with two-thirds of firms expecting growth next year due to anticipated demand and infrastructure investment. Whether this improved confidence will translate to increased real work is yet to be seen especially in an economic backdrop of increased financial pressure, economic and political uncertainty.

Andy Burnham has outlined plans to enhance UK infrastructure; yet, the industry has expressed worries regarding funding, skills gaps, rising costs, and the delivery of housing. Mace’s recent productivity report may provide valuable perspectives on tackling ongoing labour shortages in the sector while supporting government goals for housing, infrastructure development and driving commercial value.

Author contact

Rachel Coleman
Rachel Coleman,
Director, Market Insight
Kishan Patel
Kishan Patel,
Research Analyst

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