Recovery under pressure

Economic Week In Review | Issue 545 | 07 September 2026

UK construction and property

  • Property sales | UK residential property sales remain above pre-pandemic levels despite ongoing pricing pressures. Year-to-date, 832,000 homes have been sold subject to contract, 5.7% above the 2017-2019 average. However, transaction volumes remain below 2025 levels, with market data suggesting accurate pricing has become increasingly important as buyers are presented with greater choice.
  • UK house prices increased by 0.2% in August, according to Nationwide, marking the first monthly increase in four months. Despite the improvement, buyers and sellers continue to adopt a cautious approach amid uncertainty over the future path of interest rates and mortgage costs.
  • Construction PMI | The S&P Global UK Construction PMI fell to 44.3 in August from 44.7 in July, signaling a twentieth consecutive month of contraction. Residential construction remained the weakest-performing sector, although the rate of decline in new orders eased and the rate input cost inflation fell to a six-month low.
  • RIBA Workload Index | Confidence among architecture practices turned positive in July for the first time in four months, with RIBA’s Workload Index rising to +4 from -1 in June. Larger firms remained particularly optimistic, supported by expectations of increased project activity.
  • Financial distress | 7,458 construction firms were in “critical” financial distress in Q2 2026, up 6.6% year-on-year, according to BTG’s Red Flag Alert report. BTG warns that weak activity is worsening the sector’s financial health, with residential construction hardest hit, especially housing development and related trades such as plumbing, heating, and air-conditioning.

Global economy

  • Global financial markets | Investors added $46.1bn to global money market funds during the week as geopolitical tensions in the Middle East and inflation concerns encouraged a move towards lower-risk assets. The inflow highlights growing caution across global financial markets.
  • India’s economy expanded by 7.8% in the second quarter, exceeding expectations despite higher energy prices and a weaker global backdrop. Analysts suggest growth is increasingly being driven by manufacturing, consumer technology and mid-sized businesses, rather than the large financial and IT firms that dominate the country’s major stock market indices.

UK economy

  • UK growth forecast | The British Chambers of Commerce revised its UK growth forecast for 2026 to 1.0% from 0.9%, warning that weak business investment continues to constrain economic activity. The organisation highlighted uncertainty, high costs and subdued investment intentions as key barriers to stronger long-term growth.
  • Budget warning | The Chancellor of the Exchequer John Healey has warned of a tough Budget as he needs to mitigate growth, inflation, and borrowing cost issues.
  • Spending power | PwC estimates that 46% of UK households live in areas where economic growth is not translating into improved spending power. The findings point to a continuing North-South divide, with households across the North of England, the Midlands and Wales reporting lower spending power than the national average.
  • ONS survey data showed that 28% of businesses remain concerned about international conflict disrupting supply chains, while 21% cited shipping disruption concerns. Among firms worried about supply chains, 53% expect sourcing costs to increase and 46% expect transport costs to rise. Concerns about climate change affecting supply chains also increased from 9% to 13% in August.
  • EY’s European Economic Outlook forecasts UK GDP growth of 1.02% in both 2026 and 2027. While growth remains modest, it is expected to exceed the Euro Area’s (0.88%) in 2026 but lag in 2027 (1.52%). EY’s UK inflation is forecast at 3.17% in 2026 and 2.46% in 2027, above the Euro Area’s 2.77% and 2.27%.

Materials and commodities

  • Global steel prices are expected to remain under upward pressure despite weak demand, according to International Rebar Producers Exporters Association (IREPAS). Chinese steel production contracted by 3.6% year-on-year in July and global output fell 0.3%, but rising energy costs, transportation costs and trade restrictions are preventing a meaningful reduction in prices.
  • Cement production | Ahead of the UK’s Carbon Border Adjustment Mechanism (CBAM) launch in January 2027, Breedon reported strong parliamentary support for domestic cement production, with around three-quarters of MPs surveyed backing policies designed to improve the competitiveness of UK manufacturers.

Environment

  • Water restrictions | Approximately 30 million people are now subject to water restrictions as drought conditions continue across England. Reservoir storage has fallen to less than 60% of capacity on average, while more than 1,400 abstraction restrictions remain in place, highlighting growing pressure on long-term water resilience
  • Wildfires | Large wildfires continue to burn across Indonesia, with toxic haze spreading into Malaysia, Singapore and the Philippines. More than 50,000 respiratory infections have been linked to the fires since July.
  • North sea | The UK government is set to approve the Jackdaw gas field in the North Sea. The owner claims it will account for 6% of UK gas output.

Friday to Friday

Price / Index Week %
change		 Annual %
change
FTSE 100 10,831.09 0.06 17.62
FTSE 250 24,584.71 -1.42 13.95
Nikkei 65,020.94 -2.09 51.15
CSI 300 4,548.05 -1.33 1.97
S&P 500 7,718.60 0.09 19.09
Nasdaq 26,506.99 0.40 22.15
CAC 40 8,278.77 -1.46 7.87
Dax 26,046.40 -1.97 10.38
$ per £ 1.3500 -0.24 -0.14
€ per £ 1.1600 -0.41 1.06
Gold £/oz 3,276.40 -0.45 23.41
Brent Oil $/barrel 96.28 9.28 46.99

Weekly Summary

While confidence is beginning to return across parts of the economy, the latest data suggests businesses remain cautious. Property sales continue to exceed pre-pandemic levels, architecture firms have become more optimistic about future workloads, and house prices recorded their first monthly increase in four months. However, weak business investment, elevated energy costs and ongoing supply-chain concerns continue to weigh on the broader outlook.

Economic growth remains modest by historical standards, with forecasters expecting the UK economy to expand by around 1% in both 2026 and 2027. Businesses continue to cite uncertainty, inflationary pressures and international conflicts as key risks, although recent surveys suggest confidence and investment intentions are gradually improving.

Author contact

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

Related reviews

Website &AGENCY