Economic Week In Review | Issue 247 | 21 September 2020
Inflation | The Eat Out to Help Out scheme pushed consumer price inflation to its lowest rate in nearly five years. Consumer prices rose at an annual rate by just 0.2%, much slower than July’s 1% increase.
UK Internal Markets Bill | The controversial Bill passed its second reading in the House of Commons. A series of adjustments have been made but the EU maintains that the bloc’s fundamental objections have not been addressed and that it is “still illegal”.
Insurance | Mishcon de Reya is preparing a group action case against 12 insurers who are refusing to pay out on claims for business damage caused by Covid-19. Recently the High Court ruled in favour of policyholders. The decision could affect 370,000 companies with £1.2bn of claims.
Employment | ONS data shows that the largest decline in employment has been amongst the youngest workers.
Materials, stocks, and currencies
Bonds | Bloomberg reported on a global “rush to cash”, with companies selling record amounts of debt this year. $2.61 trillion of bond sales this year so far, more than any other full-year result.
Paving blocks | Marshalls reported that restructuring and a 94% rebound in sales have strengthened the business following a 25% fall in turnover earlier in the year.
Construction and property news
M&E survey | An in-depth trade survey found that M&E contractors are now far more optimistic about future work prospects as the impact of Covid-19 were not as bad as they feared. 67% of responding firms expect turnover to increase or remain the same in Q3 2020.
Red diesel | Consultations on ending the entitlement to use red diesel in construction plant from April 2022, which the Chancellor has described as “a £2.4bn tax break for pollution that’s also hindered the development of cleaner alternatives”, end on 1 October 2020.
Tideway | The last giant tunnel boring machine was lowered to dig the final 5.5km stretch of the new super sewer this week. The project is expected to finish in 2025, nine-months late due to the impact of Covid-19.
Broadband expansion | Openreach announced a £12bn expansion plan which will be a boost for construction and a boost for efficiency of the economy too
World growth | The OECD has revised its forecasts to suggest that the global economic slump will not be as severe as it first thought, upgrading the outlook for 2020 from -6% to -4.5%
Spain | The Bank of Spain has forecast an unemployment rate of around 20% until at least 2022 and its economy may shrink by between 10.5% and 12.6% this year.
Germany | Investor sentiment rose unexpectedly in September, with the ZEW economic research institute stating that there was confidence in a recovery from the current coronavirus crisis despite headwinds from stalled Brexit talks and rising covid-19 Cases. The survey rose from 71.5 to 77.4, whereas economists had expected a fall to 69.8.
Regional contraction | Asia’s developing economies are expected to contract for the first time in six decades this year. The Asian Development Bank expects a contraction of 0.7% this year followed by a recovery of 6.8% next year.
America | The Federal Reserve announced that interest rates will be held at the current near-zero rate. It expects to “moderately exceed” its target of 2% consumer price inflation “for some time”.
Published every six months, our Tender Price Index is an analysis of inflation price deviation in construction prices. Click on the link above to view our most recent Index.
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Brent Oil $/barrel
Concerns are increasing over the UK’s second wave and the government mulling new measures introduced, with Boris Johnson stating that he does not “want to go into bigger lockdown measures” but there may be a new three-tiered set of restrictions focussed on curfews, and reducing household-to-household contact.
It is encouraging to see that the OECD has revised its global growth forecast to show a less severe fall, as well as seeing positive investor sentiment returning to some areas but the scars left in employment will be an ongoing concern, particularly as the furlough scheme comes to an end next month.
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