Issue 548 | 28 September 2026 - Turner & Townsend alinea

UK construction and property

Tender prices | The BCIS estimates tender prices rose 0.7% between Q2 and Q3 2026 and 3.2% year-on-year. Tender prices are still lagging behind construction input costs, reflecting subdued activity amid geopolitical uncertainty. According to the BCIS panel, contractors are increasingly willing to bid (77% in Q3 vs 67% in Q2), though downside risks remain from potential postponed decisions around the autumn Budget, mounting contractor cashflow pressures, and potential difficulty in sustaining competitive prices indefinitely.
Heat networks | The government has announced a £90 million investment in heat networks to help over 750,000 households cut energy bills, improve efficiency, and support low-carbon heating, while creating more than 2,000 jobs through new infrastructure improvements and projects.
Degree-level apprenticeships in construction are rising, with architecture and construction programmes increasing by 95% since 2024, according to research from the University Vocational Awards Council (UVAC). The trend shows universities are increasingly backing degree apprenticeships to address built environment skills shortages.
Planning approvals for new homes in the UK have dropped to their lowest level in 13 years. In the year to June 2026, a total of 214,515 homes were granted planning approval highlighting the ongoing slowdown in residential development activity.

Global growth forecasts | The OECD has lifted its 2026 global growth forecast to 2.9%, signalling slower momentum than last year’s 3.4%. It notes the global economy has held up better than expected amid Middle East tensions, but warns that high inflation, interest rates, government debt costs, ongoing conflicts, and uncertainty in AI investment returns could limit future growth. Several major economies were upgraded, while the 2027 global growth forecast was slightly cut to 3.0%.
US-China tariffs | Following the Trump-Xi meeting in Washington, the US and China agreed to cut tariffs on $30 billion of imports each. They agreement comes alongside plans to establish a US-China “board of trade” to help improve bilateral trade between the two countries.
Borrowing costs | US government borrowing costs have risen to 5.12%, the highest since before the 2008 financial crisis, with investors increasingly worried about an overheating economy and persistent inflation. Global debt has reached $365 trillion, with international organisations stating higher borrowing costs are now seen as a major risk to future growth, particularly in developed economies.
Inflation forecasts | The OECD forecasts G20 headline inflation to reach 4.1% this year, easing to 3.6% by 2027, assuming Brent crude and gas prices peak in late 2026 then fall throughout 2027. In comparison, UK inflation is forecast to peak at 3.1% in 2026 before declining to 2.6% in 2027.

UK borrowing costs | The UK government borrowed £18.3 billion in August, £3.5 billion more than Office for Budget Responsibility (OBR) forecasts, and rising debt interest—around £50 billion since April—has already exceeded projections, further weakening the fiscal outlook ahead of the budget. The year-to-date shortfall is £77.3 billion, £8.1 billion above forecast.
UK manufacturing | A Confederation of British Industry (CBI) survey shows UK factory orders at their highest in over three years, signalling a potential manufacturing recovery and stabilisation. Prices are still rising but at a slower pace, and new orders have increased, with the shortfall now much smaller than before.
UK growth forecasts | The OECD now expects the UK economy to grow 1.1% in 2026, up from 0.9%, driven by strong domestic demand. Growth remains below last year’s level and is projected to slow to 1% in 2027 due to moderating global growth and higher energy prices and interest rates continuing to dampen economic activity.

Oil | In September, Saudi Arabia increased crude oil exports to about 6 million barrels per day, the highest since the war began, in line with its 2025 average export level.
Steel | Global crude steel production fell 1.7% year-on-year in August to 144.2 million tonnes, as lower output in China, the EU, and Brazil outweighed increases in India and the US.
Copper | China’s refined copper production growth has slowed to a multi-decade low, with output expected to rise only 3.0–3.4% this year versus 10.4% in 2025. This slower output growth is expected to support copper prices, with consultancy, CRU forecasting an average of $14,500 per ton in Q4.
Exchange rates | The pound has slightly strengthened against the dollar (0.1%, up from a three-month low) and the euro (0.2%, up from its early-July low) last week, helped by growing investor expectations that the Bank of England will raise interest rates to tackle rising inflation driven by high energy prices.

El Niño | The developing 2026 El Niño is already the most intense on record, with central-eastern Pacific temperatures 3.05°C above average, surpassing the 2015 record of 3.02°C. While the UK is less directly affected, the Met Office notes it increases the likelihood of wetter, stormier weather in north-west Europe in late autumn and early winter.
Extreme heat | German insurer, Allianz’s new Climate Risk Tracker estimates that extreme heat cut Europe’s economic output by nearly 0.5% of GDP (€113 billion) this year, mainly due to lower labour productivity, longer breaks, more worker absences, and reduced industrial and economic activity during periods of extreme heat.