Issue 261 | 4 January 2021 - Turner & Townsend alinea

Economic Week In Review | Issue 261 | 4 January 2021

Global news

Manufacturing activity in France and Germany increased in December, despite fresh lockdowns. Activity in Germany grew at its fastest pace in three years.
US elections | The run-off elections, which will determine the political balance of US Senate, are to be held in Georgia on Tuesday.

Property and construction news

Trade credit insurance | The government has given a six month extension to its trade credit reinsurance scheme. Recent disruptions, reduced cashflow, and greater risk of insolvency means that some firms have seen TCI withdrawn, higher premiums or reduced cover.
Housing | 105,000 new mortgages were approved in the UK in November, the highest number since August 2007.
Debt | Unsecured lending fell by £1.5bn in November as borrowers made larger repayments. Consumer credit has fallen in seven of the last nine months (rising in July and marginally in August).

Materials, stocks, and currencies

Oil prices rose ahead of an OPEC meeting to discuss output and expectations for the year. OPEC has warned that the oil outlook for the first half of 2021 is full of downside risks, but there are hopeful signs.
Stockmarkets were buoyed by the news of several vaccine roll-outs and support around the world.
Currency | The Chinese RMB strengthened past $6.50 dollars for the first time since the beginning of the trade war in 2018 following the strength of the Chinese economy and weakness in the US. It is thought that any excessive rise in the yuan will be stopped.

UK news

Job losses | The Centre for Retail Research has found that UK restaurants and casual dining firms saw nearly 30,000 job losses last year, a 163% jump in redundancies. Branch closures increased by 76% to 1,621.
Last to improve | A survey of economists by the Financial Times revealed that the UK will be “among the last, if not the last, of the high-income economies to regain its pre-pandemic size”. Unemployment is expected to increase, and interest rates are thought to remain low.
Border challenges | Despite the removal of import tariffs, the price of goods moving across the border is expected to increase due to the additional administrative work and checks at the border. The Food and Drink Federation estimates an additional £3bn cost for importers (an 8% increase to checkout prices).
Brexit paperwork | The Brexit deal includes a 12-month grace period on some elements of ‘rules of origin’ declarations, offering some temporary relief on the volume of paperwork required.
UK manufacturing activity has risen to its highest level since November 2017, a reading of 57.5.

Shipping - More than Brexit

The flow of goods into and out of the UK was an increasingly hot topic towards the end of 2020, particularly with the closure of Dover in the run-up to Christmas.
It is a topic that we have frequently covered in this publication and one that could continue to affect the construction industry despite the UK/EU trade deal.
Read more about what is affecting the flow of goods across UK borders, on our website <<here>>

Tender Price Index

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
FTSE 100	6,555.82	0.83	13.99
FTSE 250	20,488.30	-0.28	-6.82
Nikkei	27,444.17	2.95	16.01
CSI 300	5,211.29	3.36	25.73
S&P 500	3,756.07	1.43	16.11
Nasdaq	12,888.28	0.65	42.87
CAC 40	5,551.41	0.53	-8.15
Dax	13,718.78	0.87	3.87
$ per £	1.3494	-0.29	3.06
€ per £	1.1106	-0.06	-5.24
Gold £/oz	1,388.75	0.03	17.02
Brent Oil $/barrel	51.80	0.99	-24.49

Weekly Summary

It could be argued that the new year starts with as much uncertainty as the last minute Brexit deal took away.

As the documents were released over the Christmas break, few will have had a chance to read and comprehend the changes that it will bring, however, news that imports will not attract a tariff is positive, but concerns remain over the administrative burden at the border especially as necessary paperwork ramps up.

With Covid-19 cases rapidly increasing, and most of the UK covered by Tier 4 restrictions, Prime Minister Boris Johnson has warned of tougher measures in due course.

It seems that despite increasing Covid cases and measures, there are some positive lights in the economy such as improvements to manufacturing, increased consumer debt repayments, a buoyant housing market due to the stamp duty holiday, and of course the two current vaccine rollouts. The next few months will no doubt set the trajectory for the year.