Economic Week In Review | Issue 250 | 12 October 2020
Construction and property news
Office space | A survey by the CBI and PwC showed that 74% of financial services firms are reviewing their space with a view to either use it differently or reduce it as the future of work becomes a more hybrid solution.
Foreign investment | Suntec Reit will acquire a 50% stake in LandSec’s Nova buildings from the Canada Pension Plan Investment Board. It is the Singaporean fund’s first deal in the UK.
Shopping centre rents | Landlords are still struggling to collect rents, with some centres only collecting a third of rents due.
SME builders | According to the Federation of Master Builders 40% of SME builders reported that workloads had “bounced back” recently, largely due to household repairs and improvements. The survey also showed that 78% of the industry expects material prices to increase.
Output | Monthly construction output increased by 3% in August, a much slower rate of growth than seen in July (17%), although it still represents an improvement.
Warehouses | Work has started on what will be Amazon’s largest fulfilment centre in Europe which is to be based in Dartford, Kent. The building will have an internal floor area of 2.3m sqft and will see £125m spent on the building and £125m spent on robotics and automation.
Data centres | Fears that data centre operators would move abroad due to Brexit do not seem to have materialised. Analysts say the market has grown since 2016 and will continue to do so, at the same rate as growth in the EU. Movement of data is worth £174bn to the UK economy.
Hospitals | The government announced 40 major hospital projects as part of a £3.7bn Hospital Infrastructure Plan. New standards will be developed to allow for standardised designs which make use of modular construction methods.
Materials, stocks, and currencies
Demand | Dry bulk commodity demand such as iron ore, coal has pushed the Baltic Dry Index higher than levels seen in September 2019. Larger ship sizes have benefited from China’s demand for iron ore for steel making.
Renminbi boost | China’s currency grew by the most in four and a half years following Golden Week – a week-long holiday that encourages domestic tourism. The renminbi rose 1.2% against the dollar on an improved economy and increasing odds of Joe Biden becoming US president.
GDP growth in August was 2.1% when compared to July. Economists had expected 4.6% and overall, the economy is 9.2% lower than February’s pre-pandemic levels.
Administrations law | A new law is being planned to scrutinise pre-pack sales of failed firms after complaints that directors are abusing the system and creditors are being short-changed by pre-pack administrations which have proliferated as they are seen as a way to protect jobs.
Youth unemployment is on course to more than triple levels seen in the early 1980s, according to research by the Resolution Foundation.
Deadline | Boris Johnson has suggested that an EU summit on Thursday is the deadline for a deal with the EU, saying that unless there is an agreement by then, it would be time to “accept and move on”.
Webinar | The Department for Business, Energy & Industrial Strategy is holding a webinar on 21st October, specifically for construction to explain what will happen post-Brexit <link here>
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.
Friday to Friday
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Brent Oil $/barrel
Some of the data releases this week have shown a slowing in the pace of recovery in the UK, raising concerns over the impact of further coronavirus restrictions (which will be announced today) as the country continues to balance economic recovery against protecting the population against a second wave of Covid-19.
With 80 days until the UK leaves the EU, and just three days before the Prime Minister’s self-imposed deadline, there still appears to be no deal on the UK’s future relationship. Thousands of businesses are still reportedly unprepared, and seem to favour hoping for an extension rather than planning for disruption, particularly at Dover. However, this has no doubt been hindered by news that the SMART freight system will not be ready before December.
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