Positioning for growth

Economic Week In Review | Issue 544 | 1 September 2026

UK construction and property

  • Data centres | According to Barbour ABI, more than £100bn of data centre construction is currently planned across the UK, reinforcing the growing importance of digital infrastructure within the construction pipeline. Growing AI adoption and cloud infrastructure demand continue to drive activity, although power and grid constraints remain significant challenges.
  • Mayoral powers | The property sector has welcomed a proposal to give mayors greater influence over significant development projects in their regions but has raised concerns over how they will be used in practice. Industry figures warned that unclear criteria and differing approaches between mayoral authorities could create uncertainty for developers and investors.
  • Residential builders | The government has announced plans to introduce a mandatory licensing scheme for residential builders as part of wider reforms aimed at tackling “cowboy” builders. This would require builders to meet minimum competence and conduct standards before operating. However, some industry groups warned the proposals will increase compliance costs, which in turn can impact capacity and discourage new entrants.
  • Facilities managament | Government announced suppliers for a £120bn facilities management framework, highlighting the scale of long-term public sector spending commitments across estate management and maintenance services.

Global economy

  • Global policy | Finance ministers and central bankers met at the G20 Sumit in North Carolina, US to discuss rising debt burdens, weak productivity, and global economic imbalances.
  • Inflation across the Eurozone rose to 3.3% in August from 2.9% in July, driven primarily by higher energy costs. The increase has reinforced expectations that the European Central Bank will continue tightening monetary policy despite relatively weak economic growth.

UK economy

  • Inflation expectations | A Citi/YouGov survey found that households expect consumer price inflation to average 3.9% over the next 12 months, up from 3.4% in July. Rising inflation expectations may complicate the Bank of England’s efforts to return inflation to its 2% target.
  • Acquisitions | The value of overseas acquisitions of UK companies rose to £25.4bn in Q2 2026, an increase of almost 62% on the previous quarter. While the number of transactions declined, the data suggests larger deals are continuing to attract investor interest. This indicates that there is confidence in the UK as a destination for corporate investment.
  • Manufacturing | The UK Manufacturing Purchasing Managers Index fell to 51.7 in August, a five-month low, due to easing output and new order growth. However, manufacturers remain optimistic about the outlook, supported by stronger export demand, easing cost pressures and the strongest rate of job creation seen in two years.
  • Public ownership | Prime Minister Andy Burnham has reiterated plans to expand public ownership of key services, arguing that lower utility and transport costs would support investment, jobs and economic growth. The government is reportedly considering measures to make it easier to bring financially distressed utility providers into public ownership.
  • AI growth | The government launched a £100m competition for UK AI start-ups as part of its wider Sovereign AI programme. The initiative aims to improve public services through applications in healthcare, defence and cyber security, while helping domestic AI firms commercialise their technology

Materials and commodities

  • Global production of iron ore is expected to speed up in the coming years. Fitch Solutions expects production growth to accelerate to 2.2% from 1.2% in the last five years. A project in Guinea is expected to be a major driver growth.
  • Copper prices neared a record high, trading above $14,800 on Comex before easing. This was driven by supply disruptions especially from the DR Congo due
    to export bans, and tariff related stockpiling in the US.
  • Chinese steel rebar futures reached their highest level since mid-June as markets prepare for the Chinese peak construction season in September. Though Chinese non-Manufacturing PMI was at 49.0 in August, which signals contraction.

Environment

  • Weather patterns | The US National Oceanic and Atmospheric Administration (NOAA) has warned that the current El Niño, is expected to continue strengthening, with a greater than 90% probability of a very strong  event developing during the winter. Current projections suggest it could be one of the strongest El Niño episodes on record.
  • Flood alerts | More than 40 flood alerts were issued across England despite 71% of the country remaining in drought. The unusual combination of drought and flooding has highlighted the increasing volatility of weather patterns and pressure on water resources.
  • Heat records | The Met Office has confirmed that the summer of 2026 was the hottest on record.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,824.26 0.07 17.82
FTSE 250 24,938.79 0.89 15.21
Nikkei 66,405.56 0.59 55.45
CSI 300 4,609.18 -0.21 2.50
S&P 500 7,711.76 0.49 19.37
Nasdaq 26,402.42 0.85 23.06
CAC 40 8,401.18 -0.81 9.05
Dax 26,569.99 1.87 11.16
$ per £ 1.3554 -0.58 0.33
€ per £ 1.1686 -0.01 1.18
Gold £/oz 3,291.22 -2.48 28.90
Brent Oil $/barrel 88.10 -4.93 29.33

Weekly Summary

High inflation expectations following last week’s data, and high energy cost continue to shape the outlook this week, with households anticipating inflation to increase at a faster pace over the coming year. Although inflation concerns are elevated across the UK and Eurozone, overall economic activity remains relatively resilient. The UK manufacturing industry continued to expand, albeit at a slower rate, and overseas acquisitions of UK companies increased significantly.

In the construction and property sector, strong demand for digital infrastructure was reflected by more than £100bn of planned data centre developments. At the same time, policymakers continued efforts to influence delivery through planning reforms, greater mayoral involvement and new proposals aimed at improving standards across the residential construction market. The key challenge remains making these projects happen amid ongoing pricing, energy and regulatory constraints.

Author contact

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

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