Economic Week In Review | Issue 260 | 21 December 2020
Empty space | Card swipe data from offices in American offices shows that cities are struggling to attract workers back. In Midtown Manhattan, the figure was lowest for ten major metropolitan areas, below the national average of 27% of returned employees.
US stimulus | US Congressional leaders have agreed on the terms of a near $900 billion plan to help the economy. Legislation will be reviewed by the House and Senate today.
Property and construction news
Reverse charge VAT | Previously delayed due to the Covid-19 pandemic, plans to change the way VAT is charged are set to come into force on 1st March 2021.
Nuclear investment | The government is in talks to fund Sizewell C, a £20bn nuclear plant in Suffolk. If built, it could provide 7% of the UK’s energy needs. China General Nuclear Power currently has a 20% stake in Sizewell C but could be planning to pull out following security concerns. If it does, the government may take a stake in the plant.
Architects’ workload expectations have fallen, ending the summer rebound. The expectations index fell from +9 in October to 0 in November. Its April low was -82.
State of Trade | The Federation of Master Builders revealed that 90% of small and medium firms have reported material cost increases, as well as shortages in timber, tiling, white goods, and PVC windows and doors, despite a fall in workloads.
Materials, stocks, and currencies
Iron ore | Prices are expected to remain high into the first quarter of 2021. S&P Global Platts Iron Ore and Steel Outlook says that strong Chinese steel output will support prices.
Steel prices | British Steel announced a price increase of £80/tonne in its January prices. , instead of the previously announced rise of £30/tonne. British Steel blamed increases in raw material costs.
Material shortages | The Builders Merchants Federation is working with government to identify which materials are being affected by problems at UK ports. The BMF noted delays for materials typically imported from the Far East (such as power tools, fixings, and sanitaryware) but also timber products from Scandinavia. The BMF has requested that any material delays get reported directly to its Chief Executive, John Newcomb.
Timber | The Timber Trade Federation has advised that timber buyers strengthen their purchasing strategies as stocks are low and are set to push prices up well into 2021.
Pound shaken | News of strict new restrictions in the UK, as well as no further news of a Brexit deal rocked the pound over the weekend.
Retail sales | Volumes fell 4% last month, ending a six-month run of growth, as new lockdown restrictions were announced on non-essential retail. However, sales remain above pre-pandemic levels, but significant concerns have been raised over the impact of the Christmas lockdown.
UK lockdown | The latest news of a new strain of Covid-19 in the UK, which led to new Tier 4 restrictions has also stopped most of the traffic (air, rail, sea, and road, including freight) out of the UK, as well as limited inward travel as drivers are unwilling to run the risk of being “trapped” by new quarantine rules. COBRA will meet later today to discuss the new travel bans and how it will impact goods arriving into the UK.
Customs Agents | The UK is expected to need 50,000 more customs agents in the coming years to help complete the vast array of forms needed to move goods across the border. Demand has pushed salaries of agents up by 40% to £35,000. Grants are available to firms to hire, and train agents, as well as £12,000 towards their salary.
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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Normally, this publication isn’t issued in the week of Christmas as important news is sparse. However, this isn’t a normal year and the week has been full of important changes and news.
We had hoped that this week would bring news of the UK’s new trade relationship with the EU, but talks are continuing, with traders expecting the pound to plummet on the foreign exchange if talks fail tonight.
The week has started with huge freight queues across Kent and European borders closed to UK citizens, it seems that we are having a taste of what could be to come in 2021.
Material shortage warnings have continued apace, despite falling workloads. This amplifies concerns of the strength of a rebound in prices if workload recovers in the near term given sustained price pressures on materials.
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