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Report
from the UK
UK economy and housing sector show robust signs
UK economic indicators suggest that the housing market remains firm and retail sales active. The annual house
price inflation increased to 10.2% in January, up from 9.3% in December. UK house prices rose 1.5% in
February according to Halifax, keeping the annual rate around 10%. The total volume of construction output rose
3.1% in the third quarter of 2006, as compared with the same period in 2005, and up 1% from the previous quarter.
The annual construction output rose 1.3% in 2006. New
private housing work also rose 3.4% in the fourth quarter, compared with a year earlier, but was 0.4% down on the
previous quarter. The annual new private housing output rose 2% in 2006, while public new housing work surged
23%. Meanwhile, a recent Confederation of British Industry (CBI) survey showed that retail sales rose for the
third consecutive month as compared with a year earlier.
House builder Persimmon has reported record profits after an ¡®exceptional¡¯ 2006. Home completions rose from
12,636 to 16,701 units. Bovis also reported excellent progress with profits increasing 13.7% and completions
climbing 15.7% to 3,123 units. Travis Perkins, a leading supplier to the building and construction industry which
includes Wickes, Keyline and City Plumbing, has reported an 8% increase in sales in 2006. The branch network also
grew by 26 to 559 site branches.
Timber expected to increase share in UK construction
Market & Business Development has estimated the demand for timber and joinery to expand by 1% annually
between 2007 and 2011. The demand would be driven by an increased share of timber in the construction industry
due, partly, by environmental reasons.
Expectations grow around the new UK Budget
Expectations grow around the last UK Budget to be presented by the Chancellor of the Exchequer, Gordon
Brown, on 21 March. There is pressure on the Chancellor to reduce taxation on companies. The CBI has called on
the Chancellor to take a tighter grip on public spending to contain the UK¡¯s slide in tax competitiveness. A Mori
survey revealed last year that 22% of the companies had relocated some of their activities abroad and a further 17%
was considering doing so. The basic reason given was the complexity of the tax system that has built up over the last
ten years. CBI also requested a reduction in Corporation Tax, which is said no longer competitive with the main
economies of Europe. The budget is expected to set the scene for all companies for at least the next twelve
months.
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