Economic Week In Review | Issue 344 | 30 August 2022
Granite columns | A ‘green’ six-storey office block in Islington has been designed using granite load-bearing columns in place of steel or concrete ones to help reduce net carbon.
Material sales fell 11.3% by volume in Q2, according to the Builders Merchant Building index. However, because of inflation, sales increased 4% by value. Prices were an average of 17.3% higher than in Q2 2021. Comparing Q2 2022 and Q2 2019 (to exclude Covid abnormalities), sales volumes were 2.7% lower, but due to price increases, sales by value was up 25.2%.
Containers | The cost of shipping fell 4%, and according to Drewry’s World Container Index, costs are now 39% lower than in the same period last year as global shipping slows, but remains 64% higher than the five-year average.
CO2 shortage | CF Fertilisers UK has halted production of ammonia and CO2 blaming high energy costs. CO2 is a by-product of ammonia production.
Generators | Fears over possible power cuts have encouraged a 35% increase in generator demand at Caterpillar generator distributor Finning as the healthcare, construction, and data centre sectors prepare ahead for future shortages.
Glass fibre | Electric Glass Fibre UK may close due to power prices and supply disruptions. The cost of keeping its furnaces running is expected to increase by 300% in April. It also needs to protect itself from possible power shortages. A few hours of disconnection could cause lasting, expensive damage.
UK construction and property
Data centres | Thames Water is to review the impact of water-cooled data centres on water supplies in and around London, with a view to looking at how raw, non-drinking water can be used and reused. Thames Water has recently challenged planning permission for a centre in Slough.
Fire dampers | The Building Engineering Services Association has issued an urgent warning about a potential safety issue in a large number of building ventilation systems because of incorrect installation of fire dampers. Self-drilling “tek” screws have been used which do not melt during a fire. This means that spring-loaded dampers will not be released to contain the spread of a fire. The full bulletin is available here.
High-rise escape | The Ministry of Housing, prompted by the Building Regulations Advisory Committee, has recommended to local authorities that they do not grant planning permission to tall residential buildings with only one set of stairs.
Vacancy rates | Empty office space in London has reached a 15-year high, with the equivalent of 60 Swiss Re buildings empty according to CoStar. There is nearly 31 million sqft of space available, an increase of 51% since the end of 2019.
Output is stalling due to hot weather and political uncertainty, according to Grafton Group’s CEO.
Surveyor workloads are increasing but profits are falling due to the ongoing skills shortage. The RICS found that 30% of respondents reported increased workloads in Q2 and that this was being driven largely by infrastructure projects. Material issues were reported by 83% of respondents, 77% reported labour shortages, and profit margin outlook fell to -14%
4% interest rates are expected by the markets as early as next May. Higher borrowing costs could be a drag on the economy.
Job vacancies fell for the first time in a year, mainly in arts and recreation, construction, support services, and transport.
Solar farms are being refused planning permission at the highest rate in five years. 23 applications were refused which would have powered 147,00 homes annually.
Germany | Germany’s Economy Minister has warned that if the government is forced to withdraw a new levy which compensates companies for increasing gas prices, Uniper SE, Germany’s biggest gas supplier, could collapse.
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
Construction costs seem to be on somewhat of a see-saw at the moment with some easing pressures and others increasing. Whilst some supply disruptions have lessened and been mitigated, changing regulations, disrupted supply chains, and crises in water and energy are all weighing on the industry.
The beginning of next week will see the installation of a new Prime Minister, which should see some stability return, and some meaningful actions towards the increasingly urgent energy crisis for both households and businesses.
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