Economic Week In Review | Issue 256 | 23 November 2020
Construction and property news
London office starts fell by 50% in the six months to September according to Deloitte’s latest crane survey. Just 2.6m sqft of new office space is under construction, however this is broadly in line with the long term average. An above-average 40% of new projects have already been pre-let. It is thought that new starts have paused whilst developers assess the long term impacts of new ways of working post-Covid.
BP HQ | The latest in a string of disposals, BP has agreed to sell its headquarters in London for £250m, and will lease 1 St James’s Square back from Hong Kong investor Lifestyle International for two years. BP aims to sell $25bn of assets by 2025.
IR35 Ignorance | A survey by recruitment firm Randstad Construction, Property & Engineering revealed that seven out of ten medium and large UK construction companies are not fully prepared for upcoming changes to IR35 tax legislation, and 36% of them are completely unaware of upcoming changes.
Stalled talks | Post-Brexit trade talks with the EU have been paused as a member of the EU team tested positive for Covid-19.
Canadian trade | The UK and Canada signed an agreement to roll over the terms of the current EU/Canada trade deal. Recently, the Canadian Prime Minister, Justin Trudeau told the Financial Times that the UK lacked “the bandwidth within government to move forward”.
Materials, stocks, and currencies
Dollar slump | Analysts have suggested that a Covid-19 vaccine could cause the US dollar to slump by 20% as the currency is usually in demand in times of stress. On the latest news on a vaccine, the Dollar index dropped to a two-and-a-half-year low.
3D printing | PERI is printing a 380 square meter, three-storey apartment building in Germany using 3D printed concrete. The project is expected to be on site for six weeks.
UK Debt | Public sector net borrowing rose £22.3bn in October. In the seven months between April and October, borrowing was £214.9bn, the highest since records began. National debt is now at 100.8% of GDP, its highest since the early 1960s. Rishi Sunak, Chancellor of the Exchequer, will announce new spending plans next week which will have implications for the 2021/2022 fiscal year and Spring Budget.
Consumer confidence has fallen to a six-month low with many people saying that their confidence in personal finances in the next six months have deteriorated.
UK retail | Footfall across all retail settings is 57.7% lower than the same week in 2019. High streets have seen footfall reduce by 64.7%, an improvement on the -79% fall seen during the spring lockdown.
Recovery | Analysts have warned that the global economic recovery is slowing and could stop entirely as the virus forces new restrictions. The IMF has encouraged nations to prepare infrastructure investment for after the virus is controlled, citing research showing large economic gains from such spending.
India | The Regional Comprehensive Economic Partnership (RCEP), the world’s largest trade deal was signed last week by 15 Asian nations, but without India who walked away from the talks a year earlier. Some have questioned whether rejecting free trade will inhibit the nation’s economic progress.
Singapore expects to return to growth next year, forecasting 4% to 6% growth, however, it also forecasts a -6% slump this year.
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
Price / Index
Week % change
Annual % change
$ per £
€ per £
Brent Oil $/barrel
It seems that the theme of the week is ‘waiting’ either for a vaccine, a trade deal, or for an understanding of the new normal and so it is of little surprise that Deloitte’s London Office Crane Survey was called “A State of Suspension”.
As we emerge from another lockdown, into a different regime, hopefully some clarity, combined with a vaccine on the horizon will enable longer term planning both on a corporate and personal scale.
The extent of increases to public sector debt will no doubt be a worry for some time, and we will likely not know the full impact of it until the Spring Budget. Many will be closely watching the budget for public works post Covid-19 to see if the Chancellor has heeded the IMF’s advice to spend more now to support the economy and deal with the impacts later in a “gradual fashion”.
To look out for this week
Rishi Sunak will detail the Spending Review on Wednesday. It will lay out public sector spending plans as well as giving a clearer picture of the economic damage done by the pandemic.
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