Economic Week In Review | Issue 303 | 25 October 2021
Materials and commodities
Timber | Supplies of timber in the UK are now sufficient and the Timber Trade Federation has suggested that any shortages are now caused by a shortage of lorry drivers. Imports of timber and panel products are 8% above pre-Covid levels.
Copper | Prices have been volatile this week driven by low supplies and high demand. Copper prices have been pushed up to near $10,000/tonne at the London Metal Exchange.
Magnesium | A critical shortage of magnesium from China, a key ingredient used in alloys for construction, threatens to cause an imminent shutdown of steel plants in Europe. Steel associations have warned of an “international supply crisis of unprecedented magnitude”.
UK construction and property news
Green infrastructure | Prime Minister Boris Johnson announced that nearly £10bn of foreign investment from 18 deals has been secured for the UK’s green infrastructure plans. Schemes include wind and hydrogen energy, sustainable homes, and carbon capture.
Decarbonising construction | Plans to decarbonise the UK construction industry have been called into question over concerns that labour and funding shortages may inhibit current plans, which include upgrading 28 million homes.
Warehouse shortage | A report by Cushman shows that the UK could run out of warehouse space within a year as supply chains are disrupted and online shopping levels continue to increase.
Prompt payment rules are to be tightened by the government and firms will need to pay 90% of invoices within 60 days, or be excluded from public contracts. In time, the target will move to 95%.
Housing starts have slumped recently due to material and labour shortages as well as fire remediation work, which suppressed housing association output. Registrations fell 27% in Q3, although this is from a 14-year high.
Northern Ireland retail | Sainsbury’s is to close one of its major stores in Northern Ireland and unions have voiced fears that “this closure could be a weathervane for more to come”
China’s property tax | China will expand its property tax trials in order to push its “common prosperity” drive. The plans is to tax residential and commercial properties in cities, but locations have not been announced.
Paris infrastructure | Paris announced a major plan to upgrade its cycling infrastructure to make it one of the most bike-friendly cities in the world. It will add 180km of permanent, separate bike paths and will more than triple the number of bike parking spaces by 2026.
US inflation | Pressures are now “brutal” as supply chain shortages push up prices and threaten consumer sending and corporate finances. Consumer prices for basic foods are up over 10% annually and general consumer prices have increased 5% in the last year. However, Treasury Secretary Janet Yellen insists that the Treasury has not lost control and inflation will return to 2% next year.
US economic growth data will be out on Thursday. Economists expect 3.2% on an annualised basis in Q3 compared with a 6.7% expansion in Q2.
Confidence | GfK’s confidence index showed a further decline this month, falling a further four points to -17, the lowest score since February, when much of the UK was still under a lockdown. Fuel shortages, rising inflation, and increasing Covid rates have all suppressed confidence.
Inflation could rise “close to or even slightly above 5%” early next year according to the Bank of England’s chief economist Huw Pill. There was a slight relief in UK inflation rates from 3.2% to 3.1% in September.
International investment | Chancellor Rishi Sunak has outlined £1.4bn of grants and plans to help unlock foreign investment into the UK’s life sciences and electric vehicle industries.
City transport | England’s seven mayoral city regions will receive £5.7bn for transport schemes in the coming Budget and £1.2bn will be used to boost bus journeys outside of London.
Covid measures | Debate has heated up this week over whether the UK needs to impose more Covid-restrictions as case numbers remain high.
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
Globally, inflation rates are increasing as a result of supply chain issues and the energy crisis, and the extent to which they affect economic recovery and growth will be an important factor.
This week’s Budget will set the tone for the coming quarters and it seems that the government is focussed on increasing international investment levels to support the green agenda, and continuing to boost infrastructure development. However, it is right to question the viability of these schemes given the shortage of both materials and labour, and makes it even more important that teams understand the impact of these issues on projects.
300 editions : A lookback
The next edition of our lookback through the six years of the Economic Week in Review continues on our website. The latest edition looks at 2017, and you can view it here.
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