Economic Week In Review | Issue 362 | 16 January 2023
UK construction and property
Output | ONS data shows that new work fell 0.4% in November, led by a 5% fall in new housing, which was largely driven by a wetter-than-average month.
Drainage | Government proposals to tackle surface flooding and sewage pollution will remove a developer’s automatic right to connect to an existing drainage network unless it has an approved sustainable drainage system (SuDS) in place.
Recession | Industry forecasters have published their views of what 2023 holds for the sector. Experian has forecast a shallow recession of -1.7% this year caused by inflation, higher borrowing costs, and labour rates, but expects that this will convert to a modest 1.1% growth next year. The Construction Products Association is often less optimistic than Experian and forecasts a 4% contraction this year, primarily caused by a 7% fall in new housing work.
Project bank accounts are being used on National Highways projects with firms being automatically enrolled. The plan aims to provide some protection against contractors becoming insolvent.
Materials and commodities
China’s reopening | Goldman Sachs expects oil prices to reach $110/barrel in the second half of the year, as China reopens. It also expects copper prices to reach $11,500/tonne at the end of the year (currently $9,000).
Metals | China’s reopening boosted copper, steel and aluminium markets. Iron ore prices currently sit 50% higher than in June.
Product availability | The latest statement from the CLC’s Product Availability Group shows that availability is generally returning to pre-Covid levels but the brick, block, plasterboard, and roofing tile markets are still disrupted. Shipping is improving with prices generally down 80% from a recent peak, and price inflation has moderated across the board. It also commented that demand has been gradually slowing which has helped to ease pressures.
Nuclear | General Fusion, a Canadian company is planning to begin constructing a nuclear fusion demonstration plant in Oxfordshire this summer after the local planning committee approved plans.
Prices | One of the world’s largest energy companies, Equinor, expects energy prices to remain higher than those seen before the Russian invasion of Ukraine due to costs of the green transition, but expects that prices will become “more and more normal” in a couple of years.
Equality and wealth | The richest 1% in the UK are now wealthier than 70% of the population according to a new analysis by Oxfam, titled Survival of the Richest. 685,500 people are worth a combined £2.8tn.
Retail | Marks & Spencer will open 20 new shops across the UK, creating 3,400 jobs. It is looking at the possibility of using abandoned Debenhams stores on high streets and in shopping centres and will be designed with families in mind, with more space between aisles. However, the retailer is also scaling back its existing store numbers by 67 to 180.
China has reduced the restrictions on its property industry in order to counter the economic downturn. Its “three red lines” policy saw targets imposed for debt, equity and assets for companies in the sector, but these have been set aside for now.
Global growth | The global economy is likely to fall into recession in 2023 according to a poll of senior economists ahead of the World Economic Forum at Davos.
Friday to Friday
Price / Index
Week % change
Annual % change
$ per £
€ per £
Brent Oil $/barrel
The news seems like something of a see-saw; as one marker moves up, another falls, or another makes itself known. However, as the UK has seen a prolonged period of uncertainty since 2016, have we become used to looking closely at the data and events that otherwise would have passed unnoticed?
With a much-anticipated recession on the horizon (albeit generally forecast to be relatively small in scale), many project teams have positioned themselves well to detect and deal with issues that may arise.
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