Economic Week In Review | Issue 339 | 25 July 2022
Materials and commodities
Steel | Tata has threatened to close its Port Talbot plant unless it receives £1.5bn of state aid to help with its decarbonisation plan which includes replacing its blast furnaces with two electric arc furnaces at a cost of £3bn. The current business secretary has deferred the decision to the next prime minister
Gas in Europe | The EU has warned its member states to cut consumption of gas by 15% warning that a complete shutdown of Russian gas is “likely”.
Gas rationing | The Energy Intensive Users Group which represents UK industries such as glass and steel has suggested that its members could be forced to stop production if gas rationing is introduced. Members also warned that many of them need a secure, constant supply of gas as a “quick or short-notice shutdown carries the risk of extensive damage” to kilns. Rationing is currently being discussed in Europe, but UK ministers have downplayed the risk.
CLC Product Availability | The latest report warns that recruitment challenges and wage inflation could create product availability issues in 2023. Currently, supply is improving but pieces are continuing to rise, particularly for energy-intensive materials.
UK construction and property
Sizewell C nuclear plant was approved by the government. It will cost approximately £20bn and will be mainly funded by the recently French nationalised EDF. Laing O’Rourke has been reported stating that it offers a seamless follow-on for the Hinkley Point C project and safeguards 10,000 jobs.
Innovation | The Future Innovation Group, which is supported by a number of construction companies, is to set up a group to harness ideas from construction placement students. The steering group will be led by students and will look to identify why the industry struggles to attract and retain
Investment in Build to Rent schemes almost doubled in the first half of 2022, compared to 2021.
Office sector | According to BNP Paribas, sales of offices in London have fallen sharply and values are being revised down as the increase of base rates from 0.1% to 1.25% in the last eight months has taken the heat out of the market. BNP Paribas’ UK Chief Executive of real estate said “I see this as more a reset than a blip…The last reset we had was the financial crisis. Brexit wasn’t a reset, Covid felt like it was, but it wasn’t.”
International buyers | The number of £10m+ homes sold in London reached the highest in a decade, encouraged by the weak pound.
NHS Pipeline | A survey of NHS bosses suggests that the plans to build 40 new hospitals are “on shaky ground” and delays to programmes were pushing up costs and putting the safety of patients at risk. Two in five hospitals are behind schedule and nearly half have had their timescales publicly reset.
Inflation | Consumer prices rose to a new 40-year high of 9.4% however many household items increase by more than the average rate. Milk, butter and oils increased by between 18% and 26%.
Retail sales fell in June despite the Queen’s jubilee celebrations. According to the British Retail Consortium, food and drink sales rose 1.2% but could not offset falls in big-ticket items.
Dover port declared a “critical incident” after French border control staffing issues led to 6 hour tailbacks. Dover’s local MP blamed poor staffing levels whilst French newspaper Le Monde pointed out that since leaving the EU, UK travellers face stricter border checks.
Business activity as recorded by the S&P Global/CIPS flash UK composite index saw the slowest growth since February 2021. However, it still saw growth, reading 52.8.
Insolvencies | The number of failing restaurants has increased from 856 in 2020/21 to 1,406 in the last year due to inflation, falling consumer spending, and labour shortages.
Rates in Europe | The European Central Bank has increased central interest rates for the first time in 11 years. Interest rates rose to 0.0% from -0.5%. A Governing Council member, Peter Kazimir, was reported saying that the next increase (in September) may be 0.25% or 0.5%.
Rates in the US | The Federal Reserve is expected to raise its benchmark rate by 0.75% when its meets later this week. That would increase the federal funds rate to a new target range of 2.25% and 2.5%.
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
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€ per £
Brent Oil $/barrel
The search for the new Conservative party leader and Prime Minister has reached its final two members who will campaign over the summer before being installed in September, and the scale of the economic challenge they are facing is becoming very apparent and as a consequence, so are the impacts that each candidate’s suggested policies could have. Current challenges around energy prices and labour disputes are quickly becoming the main focus of concern, especially as the next price cap move will be locked in before the next Prime Minister is in place.
These challenges, particularly rising interest rates and inflation are also affecting confidence, causing delays or deferments, both of which we are monitoring closely.
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