Future benefits?

Economic Week In Review | Issue 358 | 5 December 2022

UK construction and property

  • Offices | The sector will miss net zero targets unless carbon footprints are better addressed, according to the BCO in its new Delivering Net Zero Carbon in the Workplace paper. It suggests new benchmarks to standardise the measurement of energy use in offices in order to move from ambition to action.
  • Life Sciences | A new report by CBRE claims that the “Golden Triangle” of Oxford, Cambridge, and London could deliver 10 million sqft of space in the next five years and that significant opportunities exist for the sector.
  • John Lewis homes | The retailer has agreed a £500m deal with Abrdn to build 1,000 rental homes in vacant shops and warehouses in Bromley, West Ealing and Reading. It is the first stage of a plan which will see a total of 10,000 homes built.
  • Energy infrastructure | Sizewell C was confirmed with a public stake of £700m (50%), ending China’s involvement. It will provide power to the equivalent of 6 million homes for 60 years. The government will also set up Great British Nuclear to develop other nuclear projects.
  • Road infrastructure | National Highways has submitted its second attempt at a planning application, after the first attempt lacked necessary details. If accepted, work could begin in 2024.
  • Workstyles | 17% of construction jobs now advertise flexible working. This includes part-time roles, home working, hybrid working, flexible start and finish times, flexible shift patterns, remote working, term-time, or jobshare. This data comes as the UK government is set to deliver legislation to promote flexible working.
  • Payment terms | Business secretary, Grant Shapps, has ordered a review into late payments to find out if small businesses are being paid fast enough.

Materials and commodities

  • Gas storage | A gas storage facility in east Yorkshire will be reopened following a request from the government. It was closed in 2017 after subsidies were removed. It is an underground cavern with the surface area equals the City of London and Westminster combined, and it will operate at 20% capacity for the next two winters. Before the store was brought back online, the UK had storage for five days of gas usage, compared to 112 in France and 111 in Germany.
  • Lithium refinery | Europe’s first lithium hydroxide processing plant has been given planning permission in Teesside. It is described as a “shovel-ready” project.
  • Timber imports have reached a six-year low according to data from Timber Development UK. Whilst some of the fall has been attributed to reduced demand, it is primarily due to healthy stock levels in the UK.
  • Oil prices rose after Opec+ reconfirmed its output cuts, stating that it will make a decision on future output once it has a better understanding of China’s oil demand.

UK economy

  • House prices have fallen at their fastest pace since June 2020, falling 1.4% in November according to Nationwide. Excluding the pandemic, it is the largest monthly fall since 2008.
  • Recession | The CBI has forecast a year-long recession in the UK. Business investment is also predicted to fall from the middle of next year and will be 9% lower than pre-pandemic levels by the end of 2024.
  • Strikes | National highways, NHS, civil service, and Royal Mail workers are amongst the increasing pool of workers who are to strike over the winter period.

Global economy

  • US jobs | Latest data shows that the US added 263,000 jobs in November and average earnings rose 0.6%. The results were stronger than expected.

Friday to Friday

Price / Index Week %
change
Annual %
change
FTSE 100 7,556.23 0.93 6.09
FTSE 250 19,363.28 -0.93 -14.50
Nikkei 27,777.90 -1.79 -0.90
CSI 300 3,870.95 2.52 -21.02
S&P 500 4,071.70 1.13 -10.28
Nasdaq 11,461.50 2.09 -24.02
CAC 40 6,742.25 0.44 -0.34
Dax 14,529.39 -0.08 -4.22
$ per £ 1.2291 1.57 -7.11
€ per £ 1.1682 0.41 -0.17
Gold £/oz 1,462.38 0.76 8.54
Brent Oil $/barrel 85.57 2.22 22.45

Weekly Summary

Despite warnings of a recession, construction costs continue to be put under pressure by a large infrastructure pipeline, energy concerns, and labour pressure. The continued high cost of living, twinned with construction’s chronic skills shortage, will no doubt impact labour rates in the short term, but should hopefully encourage productivity gains in the longer term.

Author contact

Rachel Coleman
Rachel Coleman,
Associate Research Analyst

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