Q1 2018

Macro Economics

The influence of higher import costs due to the weaker pound is thought to have peaked, the recent rally in sterling is helping, albeit pressure is still being felt in rising oil prices.

Concerns remain on the level of UK productivity which lags behind G7 counterparts, with GDP at 1.5% annualised. There was good news for manufacturing in 2017, which saw growth outpacing the service sector for the first time in seven years.


The Consumer Price Index (CPI) measure of inflation remains static in January at 3.0% having dropped from 3.1% to 3.0% between November and December.


The Retail Price Index (RPI) measure fell to 4.0% from 4.1%. Pressure remains on the consumer with average earnings growing at only 2.2%.


Interest rates were raised in November 2017 for the first time in a decade from 0.25% to 0.5%, with the market pricing further rises in 3Q 2018.


The Construction Products Association (CPA) remains cautious about growth in 2018, with infrastructure and private housing continuing to see increased output but the rest of the market less buoyant and at best flat.

The potential for import tariffs and tougher border controls could both impact the supply of materials in a post-Brexit market.


The volume of infrastructure work remains high with major projects moving forward. However, both TFL and Network Rail have cut investment programmes reflecting their constrained budgets