Should we focus on retraining?

Economic Week In Review | Issue 286 | 28 June 2021

Shipping

  • Shipping continues to be a crucial issue in the materials chain, and the latest shutdown at China’s Yantian port will continue to add to problems of container shortages and high shipping costs. McKinsey & Co expect that it could be a month before the port is fully open again.

Property and construction news

  • Redcar demolition | Nine firms have been chosen for the £150m demolition of the Redcar steelworks. It will keep 1,000 workers on site for the next 12 months. Around half a million tonnes of scrap is expected to be recovered.
  • Weekend working | Unite has called for the construction industry to end its culture of long hours and reduce reliance on weekend working as it voices concerns that the sector may miss out on the opportunities of flexible working. Unite comments that “for far too many construction workers long hours is a constant grim reality that has to be endured and this must change if the industry is ever going to become more attractive to a younger more diverse workforce.”
  • Old Oak Common | The Transport Secretary has agreed for permanent works to start at HS2’s “super hub” station. The £4bn station will support 2,300 jobs at its peak. Work will start on the 1.8km long diaphragm wall and piling rigs will work on 160 reinforced concrete columns in the walls.

UK news

  • Jobs | The UK food market has warned that the pandemic and Brexit are stretching the industry to capacity as Covid restrictions are unwound. A “catastrophic” dearth of drivers, and a lack of workers along the production line are causing serious concerns.
  • Furlough | Thinktank Resolution Foundation has warned that the UK jobs market and pay growth is overstated as total hours worked in the UK are still 7% lower than pre-crisis levels. It warns that overstating the labour market could lead to a dangerous complacency as the furlough scheme is cut back this week.
  • EU settled status | The period to apply for the EU Settlement Scheme closes at the end of June.
  • EU trade | Trade disruptions between the UK and the EU eased a little in April, boosted by exports of iron and steel. UK sales to the EU rose 2% compared to a month earlier.
  • Business rates | A report by Altus Group shows that businesses now owe local councils nearly £2.5bn in unpaid business rates. £1.18bn was accrued last year. MPs are preparing to debate legislation that could rule out Covid-related business rates appeals.
  • Business support | Small businesses have asked for further help to bridge the gap between the end of support and the possible end of restrictions on 19th July. From the beginning of July, wage costs for previously furloughed workers will increase (including an increase to pensions and NI payments), repayment of deferred VAT bills will start, and more than £45bn in emergency bounce-back loans will be due.
  • Inflation | At the recent Bank of England meeting, the departing chief economist, Andy Haldane, was once again the dissenting voice on the Bank’s quantitative easing programme, voting for a reduction in bond purchases.
  • Rural broadband | BT and satellite operator OneWeb (which is partly owned by UK taxpayers) have signed a deal to explore ways to provide broadband to remote areas of the UK.

Global news

  • US labour market | Nearly 20% of young adults in the US are neither working or studying. According to the latest report by the Centre for Economic Policy and Research, 3.8 million people in America, aged 20-24 deemed NEETs (Not in Employment, Education or Training) due to job losses or course deferment.

Currencies

  • Cryptocurrencies | China has told banks and payment platforms to stop supporting digital currency transactions. At the same time, in the UK the FCA has warned that Binance (the world’s largest crypto exchange) cannot conduct any “regulated activity” in the UK.
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 7,136.07 1.69 15.86
FTSE 250 22,646.01 1.44 32.33
Nikkei 29,066.18 0.35 29.11
CSI 300 5,239.97 2.69 26.60
S&P 500 4,280.70 2.74 42.26
Nasdaq 14,360.39 2.35 47.18
CAC 40 6,622.87 0.82 34.90
Dax 6,622.87 0.82 34.90
$ per £ 1.3898 0.59 12.68
€ per £ 1.1642 0.03 5.84
Gold £/oz 1,283.36 0.36 -10.63
Brent Oil $/barrel 76.18 3.63 85.71

Weekly Summary

The UK could be on the verge of a skills crisis unlike any other. Hours worked are still 7% below pre-pandemic levels, but labour pressures are being seen throughout various industries, including construction. This suggests that the industry should be increasingly focussing on attracting people into the industry and committing to training programmes, as outlined by the recent Plan for Skills and looking for ways to make the sector more attractive to those from other industries.

As government support for businesses is eased and withdrawn, companies will face higher bills, and repayments of deferred bills or support will also start. This will strain the finances of some companies, particularly if cashflow or productivity have not returned to normal. Understanding your supply chain, and what pressures could sit within them will be crucial for all sectors over the next few months.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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