Clearer skies ahead?

Economic Week In Review | Issue 357 | 28 November 2022

UK construction and property

  • HS2 conveyor belt | More than five million tonnes of spoil will be removed from the London section of HS2 by a 1.7-mile-long conveyor belt, eliminating the need for one million lorry movements. From Old Oak Common, the conveyor runs at 2.1 metres per second, and the journey to the logistics hub takes 17.5 minutes. From there it will be moved by rail.
  • Building safety levy | Plans which will see a tax on residential developers are now open for comments.
  • Last mile deliveries | Courier Gophr has launched Gophr Trades to serve the construction and DIY industry. Founding partners include Screwfix and electrical distributor Rexel.
  • Equipment sales numbers have increased 11% in the last year, and this recent increase takes sales almost back in line with 2021 levels. Mini/midi and crawler excavators were the most popular.
  • Highways planning | The National Audit Office has warned that the Department for Transport and National Highways will have some “difficult decisions” to make if planning decisions are not made more quickly because of inflationary pressures and changing government priorities. More than a third of projects have not secured permission by the expected time.
  • Retail space | Increased mixed-use schemes in Oxford Street are expected to convert 1.32m sqft of retail space to offices in the next five years, according to Savills.
  • London market | Based on an analysis of 168 European submarkets, AEW claims that the UK will be the most attractive country for investors next year.
  • Green value | MSCI’s latest report shows that London offices with a BREEAM or LEED certification sold for 26% more than uncertified buildings in Q3 2022. The premium has increased from 1% in 2018.

Materials, commodities and currencies

  • Sterling | The pound has regained ground against the US dollar and the euro over the last couple of months. However, hedge fund Rokos Capital Management has warned that it still looks “vulnerable” to falls as the UK enter recession and that the UK’s economy has already deteriorated due to Brexit.
  • Brick prices will increase after Forterra announced its fourth price rise of the year. Prices will increase by 16.5% and are expected to increase again in six weeks, although it is not known by how much.

UK economy

  • Net migration in the UK reached a record high of half a million people in the year to July 2022 as many global Covid-restrictions end and as a result of resettlement programmes for Ukrainians, Afghans and Hong Kongers. The net balance of EU nationals, however, was -51,000.
  • Business health | Restaurants are closing at a faster rate than during the Covid pandemic with numbers up 60% in the last year due to the “toxic mix” of energy costs, staff shortages, and the cost of living crisis reducing demand, according to advisory firm Mazars.
  • Housing market | Data from Zoopla shows that house-buying activity has fallen 44% since Liz Truss’ Budget. Its executive director, Richard Donnell, said, “there’s a lot of momentum coming out of house price inflation and indices always lag”.

Global economy

  • China’s property market | Lenders have offered $162bn of credit to the country’s property developers as the central government eases controls on leverage in the sector. China’s property market drives a quarter of its economic output.
  • Germany | GDP grew faster than expected in Q3, at a rate of 0.4%, but economists still expect it to enter a recession over winter. Lower gas prices and a mild autumn weather which lowered usage have helped limit inflation.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 7,486.67 1.37 6.28
FTSE 250 19,545.70 1.36 -13.28
Nikkei 28,283.03 1.37 -1.63
CSI 300 3,775.78 -0.68 -22.31
S&P 500 4,026.12 1.53 -12.37
Nasdaq 11,226.36 0.72 -27.53
CAC 40 6,712.48 1.02 -0.40
Dax 14,541.38 0.76 -4.69
$ per £ 1.2101 1.69 -9.16
€ per £ 1.1633 1.16 -1.29
Gold £/oz 1,451.32 -1.43 7.38
Brent Oil $/barrel 83.71 -4.46 15.11

Weekly Summary

Planning delays and inflation are clearly issues that the construction market continues to grapple with, but it seems that there may be some clearer skies just over the horizon, particularly for buildings which can meet evolving ESG requirements.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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