Economic Week In Review | Issue 251 | 19 October 2020
Construction and property news
Payment rules | A government consultation on proposals to make payment rules for businesses tougher is set to close this week. Amongst proposals is a commitment to pay 95% of invoices to smaller businesses within 30 days.
IR35 changes | HMRC has warned construction companies to prepare for changes to the IR35 rules, confirming that the controversial changes will come in from April 2021. The changes were due to come into force in April 2020 but were pushed-back due to the coronavirus outbreak. The proposed changes could have significant consequences in terms of productivity and output as the sector is hugely reliant on the self-employed workforce.
Deloitte has announced plans to close its offices in Gatwick, Liverpool, Nottingham, and Southampton as a cost-cutting move, and as the pandemic encourages more hybrid models of working.
Felixstowe | Britain’s largest container port has come to a standstill, a problem reportedly caused by a shortage of labour due to Covid-19. Hauliers have reported a shortage of time slots to pick up containers resulting in storage fines and delays. Bifa, the international freight forwarders’ association has called for government intervention at the port. Approximately 40% of all containers coming into the UK transit through Felixstowe. Brexit is expected to add further pressure at the port.
No Deal | Government preparations for a No Deal exit from the EU will include a major advertising campaign to publicise customs rules as the prospect of severe disruption increased last week as the PM said that trade negotiations were “over” and traders should prepare for a No Deal scenario. A survey showed that over half of companies were not prepared, particularly for customs changes despite it being a Conservative manifesto pledge in 2019 to take the UK out of the customs union.
Concrete | Hanson has spent £2m upgrading its King’s Cross concrete plant. The move will allow it to supply major projects in the capital, as well as helping to reduce lorry deliveries of cement and aggregate.
Borrowing | According to the Institute for Fiscal Studies (IFS) government borrowing will reach levels not seen in peacetime. The IFS expects debt to be just over 110% of national income by 2024-25, an increase from 80% before the pandemic and 35% before the 2007-08 financial crisis. Historically low interest rates mean that the debt is cheaper than previously. Many expect this to make large tax increases in the coming years “all but inevitable”.
Unemployment | Analysts expect UK unemployment to increase to between 8% and 8.5% in the first half of 2021.
Underpowered NHS | According to Citibank, “the UK had the worst starting point amongst the G7 and Spain” with just seven intensive care beds per 100,000 people, compared to 29 in Germany.
Retail | A net closure of 3,001 stores in the first half of 2020 was a record high, as on average more than 60 stores closed per day while 28 opened. The Local Data Company warns that with 22% of chain stores still temporarily closed, this could be the tip of the iceberg,.
Global growth | Analysis from Citibank reports that every major economy bar China shrank in the first half of the year, with most seeing historic falls. The International Monetary Fund expects China to see +1.8% GDP growth this year and +8.2% in 2021, compared to -9.8% and +5.9% in the UK
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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Annual % change
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Brent Oil $/barrel
Similarly to the beginning of the pandemic, the news is evolving faster than a weekly publication can keep up with. In the past week we have seen announcements that the most likely Brexit result is a No Deal environment (which is being termed “Australian-style”), and much discussion over the regions entering the new tiered covid-19 restrictions.
However, the focus of this publication continues to be on some of the items which may have failed to reach the headlines but are important for construction and property.
Things to look out for this week
The Internal Markets Bill will be debated in the House of Lords this week, where it is rumoured that the controversial clause which hindered talks with the EU could be softened, according to Bloomberg.
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