Cautious optimism

Economic Week In Review | Issue 537 | 13 July 2026

UK construction and property

  • UK construction stayed in contraction in June, but conditions improved from May. The downturn was due to weak housing sales, high interest rates, financial pressures, lower business investment, project delays, and fewer public-sector jobs. Despite ongoing weakness, the rate of decline in new work slowed, and some firms saw new opportunities in defence and energy. Business outlook improved from May, though confidence is still below average.
  • Autonomous robots | McLaren Construction has partnered with Field AI to deploy autonomous robots on UK sites to automate inspections, monitor progress, boost quality assurance, and improve safety with AI-powered data analysis.
  • Product information management | Research by GS1 UK and Barbour ABI found the UK construction sector may lose up to £3.8bn yearly from poor product information management, causing delays, rework, increased costs, and safety compliance issues.
  • Skills development | As the government works to speed up skills development by simplifying apprenticeships, construction bodies have implemented new risk-based assessment frameworks, particularly for safety-critical positions, to maintain strong competency standards.
  • Roofing | A recent National Federation of Roofing Contractors (NFRC) survey indicates that the roofing sector is experiencing a downturn, with reductions in workloads, new enquiries, and overall business confidence noted in early 2026. Although material costs continue to rise, fewer contractors are raising their tender prices, which suggests that companies are absorbing these costs to stay competitive.

Global economy

  • Global growth forecast | The IMF has revised its global growth forecast for the world economy down to 3.0% from the previous 3.1%. This adjustment is due to the effects of the Iran War on energy markets. However, robust investment in AI and technology has helped offset these challenges.
  • OECD employment has reached an all-time high, with further growth expected through 2027. Despite this strength, unemployment among young people, including graduates, has begun to rise in some countries, suggesting not all groups are benefiting equally from seemingly good labour market conditions.

UK economy

  • UK debt | The Office for Budget Responsibility (OBR) projects UK debt will keep rising, mainly due to ageing population and higher healthcare costs. To stabilize debt at 95% of GDP, the report found that the government must improve the budget by 3.8% of GDP in 2031/32. Delaying action increases the challenge; waiting until 2050s may require tightening up to 8% of GDP. If productivity improves to pre-crisis levels, the tightening of the budget drops to 1.8% of GDP.
  • UK growth forecast | The IMF upgraded its forecast for UK growth by 0.2% to 1.0% making the UK the only G7 country with an upgrade. The economy was boosted by strong early-year growth and weaker than expected impact from Middle East tensions, aided by lower oil and gas prices.

Materials and commodities

  • Concrete | The UK concrete industry has introduced its inaugural sector-wide Circular Economy Action Plan (CEAP), outlining a strategy to enhance resource efficiency, prolong the lifespan of concrete, and promote a more circular built environment. This plan was created by the Mineral Product Association (MPA).
  • Oil prices experienced a significant increase, as benchmark Brent Crude rose by 4% to approximately $79 per barrel, after renewed US-Iran military actions over the weekend.
  • Steel Industry bill | The Steel Industry bill has finished its review process in the House of Lords. If approved, this legislation would allow the government to nationalise steel companies or assets when ministers consider it to be in the public interest.
  • LNG | EU nations imported 9.89 million metric tons of Russian liquefied natural gas (LNG) from Yamal in H1 2026, up 18% from H1 2025, despite plans to end Russian gas imports from January 2027.
  • Aluminium | ING cut aluminium price forecasts as Middle East supply risks eased and production recovered faster than expected, reducing global shortage fears. Chinese aluminium exports rose 16% in May 2026, helping ease the market tightness associated with the Middle East conflict. Prices should stay strong, but an extreme bullish scenario is now less likely.

Environment

  • Climate adaption | The UK Government Office for Science’s report, “Economic Opportunities of Climate Adaptation for the UK,” shows climate adaptation can boost economic growth and resilience. Global spending in climate adaption may total £3.5 trillion in the next decade, offering major business opportunities in resilience solutions.
  • Extreme heat | Experts estimate over 2,700 heat-related deaths in the UK during May-June 2026 heatwaves. Global temperatures have risen by about 1.4°C since pre-industrial times, causing more frequent and intense heat events, amplifying the growing public-health impact of extreme heat.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,497.29 -1.70 17.40
FTSE 250 23,371.41 -0.71 8.13
Nikkei 68,557.73 -1.70 73.26
CSI 300 4,780.79 -1.27 19.08
S&P 500 7,575.39 1.23 21.02
Nasdaq 26,281.61 1.74 27.67
CAC 40 8,338.67 -1.99 6.51
Dax 25,067.09 -2.76 3.35
$ per £ 1.3400 0.29 -0.79
€ per £ 1.1700 0.14 1.48
Gold £/oz 3,073.42 -1.72 23.61
Brent Oil $/barrel 76.01 5.39 8.03

Weekly Summary

Last week, the IMF raised its 2026 growth forecast for the UK to 1%, making it the only G7 nation to receive an upgrade. The economy benefited from robust growth earlier in the year and less severe impacts from the Middle East than anticipated. However, it’s important to remember that these estimates were completed before the most recent conflict in the Middle East, which has led to an increase in oil prices. The IMF’s projection for UK growth next year remains steady at 1.3%, with inflation anticipated to decline toward the government’s 2% target by mid-2027.

The latest PMI for the construction industry was less encouraging compared to the UK’s growth forecast. The UK construction sector continues to contract, mainly due to significant challenges in civil engineering and housebuilding. On a positive note, sentiment is improving, declines in new work are slowing, and there are emerging opportunities in energy, defence, and infrastructure. These factors indicate that the worst phase of the downturn may be starting to subside.

Author contact

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

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