Economic Week In Review | Issue 342 | 15 August 2022
Felixstowe | Port workers announced eight days of strikes which will see 1,900 workers stop work between 21-29 August. Felixstowe is the UK’s major container port so it is expected that the strike will further disrupt supply chains.
Oil | Shipping costs for oil have increased, with the cost of shipping US crude to Europe costing 12 times more than at the start of 2022 as Russian crude shipments have been diverted to Asia.
European shipping | The recent European heatwave has severely lowered river levels across Europe making many unnavigable or forcing ships to drastically reduce their load. German factories and power plants rely on the Rhine, particularly for coal deliveries. It is currently just below 40cm deep in parts, higher than the record low of 28cm in 2018.
UK construction and property
Modular | The UK’s tallest modular tower will be built at Canary Wharf. The 48-storey tower by Tide Construction received planning permission.
Demolition levy | The CIOB has called for a demolition levy on new builds in Scotland akin to the VAT which is repayable on renovation work.
HS2 | The company’s annual report shows that £9.5m has been set aside to account for an error in tax status under the IR35 rules on self-employed workers.
HS2 delays | The bid for Conservative party leadership has delayed procurement of the £5.2bn to £7.2bn main works civils framework for phase 2a because the approvals needed to issue the PQQ were delayed.
Output fell by 1.4% in June, the first monthly decrease since October 2021. Both new work and repair and maintenance fell, but the main contributor was private new housing and private new work which fell by 6.1% and 4.5% respectively. New orders fell 10.4%
Labour | The Builders Merchants Federation chief executive warned that “serious concern” had been expressed over labour supply and cost. The BCIS expects inflation to cause wage awards to “rise significantly” in the near future.
GDP growth fell 0.6% in the month to June 2022 (but still +1.9% compared to June 2021), largely due to the additional bank holiday for the Platinum Jubilee which boosted the number of working days in May, and reduced them in June.
Energy bills are expected to exceed £5,000 next year for the average household. Whilst heads of energy companies met at 10 Downing Street last week, no concrete plans to support households were agreed. Energy producers have warned that planned investment into renewable energy could be under threat if they are taxed more.
China’s manufacturing | Factory orders in China are falling as orders from overseas customers are reducing. Some factories have suggested that the best they can expect is for orders to remain flat against last year.
China’s growth | Retail sales, industrial output and investment levels in China have all slowed, below expectations, and youth unemployment has reached a record high.
European offices | The cost of servicing debt has risen higher than income for the first time since the financial crisis for European developers, according to analysis from the Bank of America.
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
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Annual % change
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Brent Oil $/barrel
Logistics systems remain disrupted by an increasing number of issues, but labour costs are fast becoming the main cause for concern. Delays to material delivery can, to some extent, be planned around, using lessons learned throughout the pandemic and the Brexit transition, but a lack of labour leaves no readily available alternative.
The current energy crisis is perhaps of highest concern with energy bills forecast to rise to the equivalent of more than two months’ average pay, as well as the warning that any attempt to remedy the situation could derail future investment into clean energy solutions. The starkest example of the result of such inaction can be seen in the rivers across Europe. The challenge will be to weigh up current and future costs and benefits.
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