Looking ahead

Economic Week In Review | Issue 314 | 31 January 2022

Materials and commodities

  • Bricks | Forterra has increased its prices by more than 10% and warned that more increases will follow. Sales of bricks increased 33% compared to 2020 levels and 5% in 2019. It announced that demand was high and some customers had already secured supply from a new factory in Desford which will be commissioned later this year.
  • Constructional steelwork volumes are expected to show strong growth this year, passing the 900,000t mark for the first time since 2008. Usage increased 17% in 2021 and is expected to grow a further 10.5%. The British Constructional Steelwork Association says that key growth sectors are industrial sheds and office buildings.

UK construction and property news

  • Fire alarms | The government has committed £27m to install fire alarms, replacing waking watch fire schemes in 300 multi-occupancy buildings. The funds are available for buildings of all heights and are expected to buy alarms for 300 tower blocks.
  • Sizewell C | EDF’s plans have been backed by a £100m government equity stake. The scheme is expected to cost £18bn and is still going through planning.
  • Pipeline | Glenigan has reported that in the final quarter of 2021 planning consents increased 26% and main contract awards rose 13%. Major planning approvals (projects worth more than £100m) rose by 46% during Q4 2021 but were down 41% on Q4 2020
  • Leveling up | The Levelling Up White Paper will be published later this week and will release around £1.5bn from the £1.8bn fund for brownfield redevelopment which was promised in the Autumn Budget. It will also reveal details about the £1.5bn Levelling Up Home Building Fund, which was announced in 2020.
  • Carbon emissions | A new bill (The Carbon Emissions Bill) will be brought to parliament this week and proposes to put a limit on the amount of carbon that new buildings are allowed to emit during their construction.
  •  Commercial property | The latest survey by RICS shows that sentiment differs across different sectors of the commercial market, with industrial tenant demand being hugely positive and offices showing a slight setback. However, it also shows that availability has fallen in recent months. and that 66% of office occupiers stated that the office was still essential for operations, and 76% of respondents suggested that they were seeing a relative increase in demand for flexible, more local offices.

UK economy

  • Growth forecasts | The IMF has forecast UK growth to be 4.7% this year. This is a slight decrease from its previous prediction of 5% but is the fastest growth amongst the G7 nations.
  • UK debt | Inflation pushed the cost of the UK’s debt up, making interest payments on government borrowing hit a record high for December. The ONS reported that interest hit £8.1bn last month, up from £2.47bn a year earlier.
  • Interest rates | The Bank of England is expected to increase interest rates to 0.5% on Thursday, and many expect this to signal a series of rapid increases. The Bank has not announced back-to-back rate increases since 2004.
  • Energy | As part of its forecast, the IMF has warned that families in the UK may need help with energy bills as inflation takes off and they face a cost of living squeeze.
  • Car production in the UK has fallen to its lowest level in 65 years according to the Society of Motor Manufacturers and Traders (SMMT). The fall has been attributed to the global semiconductor chip shortage and covid-related disruption.

Global news

  • Build Back Better | The White House hopes to “reset” its Build Back Better $1.75tn spending bill, with the slimmed-down version seeking to salvage climate change measures, but abandoning child tax credit and paid family leave. The IMF forecast the US’ economic growth to be reduced from an expected 5.2% to 4% this year after it removed the effects of the original bill.
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 7,466.07 -0.37 16.52
FTSE 250 21,643.30 -2.78 6.99
Nikkei 26,717.34 -2.92 -3.42
CSI 300 4,563.77 -4.51 -14.73
S&P 500 4,431.85 0.77 19.32
Nasdaq 13,770.57 0.01 5.35
CAC 40 6,965.88 -1.45 29.02
Dax 15,318.95 -1.83 14.04
$ per £ 1.3415 -1.07 -2.24
€ per £ 1.2022 0.60 6.34
Gold £/oz 1,337.19 -1.25 -0.79
Brent Oil $/barrel 90.03 2.43 61.11

Weekly Summary

Overall sentiment is becoming increasingly positive with a growing pipeline and a number of key government funds being released. However, the adjustment to growth expectations in the US following the stalling of the Build Back Better plan shows how vital continued government spending is.

Unsurprisingly, many will be closely watching the Bank of England’s announcements over the next few weeks as it outlines its view of future rate rises, as contending with increasing inflation and interest rate rises hasn’t been a feature of the market for some time.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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