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Report
from the UK
New UK budget sparks mixed reactions
The Chancellor of the Exchequer presented his last budget on 21 March as expected, announcing a cut in the Standard
Income Tax rate from 22 pence to 20 pence a pound. However, the starting rate of 10 pence a pound was
removed, which could affect some low paid people. Overall the budget was generally neutral in its outcome,
according to some analysts. Corporation Tax was reduced by 2% to 28%, benefiting large companies. In contrast,
small to medium manufacturing companies are discontented because their investment allowances were
cut. These changes will not take effect until April 2008, when Gordon Brown will no longer be Chancellor of the Exchequer.
Report sees reduced UK sawn hardwood market
Two reports have been published recently on the hardwood trade in the UK. The first covers the home
grown timber sector in 2006. The home grown share of the sawn hardwood market is only 2%,
according to the UK Forest Products Association, amounting to about 54,000
m3. There were only 20 hardwood sawmills still operating in 2006 and some of those imported wood from
continental Europe to keep operating. The second report, published in the TTJ, indicated that 2007 was expected to
be equally difficult in relation to supplies as 2006 as the UK market was no longer of great importance to shippers,
who could find many easier markets at no less or even better return.
Building companies merge amid robust housing market
Mortgage lending hit a record high in February, according to the Council of Mortgage Lenders (CML). CML said
that record borrowing reflected the continued strength of the housing market and people¡¯s desire to get on the
housing ladder. The furniture sector was reportedly worried about the possible slowing down of the housing
market, not so much in price but in the number of properties coming to market and the volume of new built.
Meanwhile, the building companies Wimpey and Taylor Woodrow have agreed to merge in a deal that will create
the UK¡¯s biggest housebuilder ¡°Taylor Wimpey¡±, worth about ¡ê5 billion. However, following the announcement,
Persimmon indicated that it might make a bid for Taylor Woodrow. In other news, construction contractors Costain
have reported a loss for 2006 and are now possibly open for take over as consolidation continues in the UK
construction sector.
UK inflation measured by the Consumer Price Index (CPI) rose to 2.8% in February while the Retail Price Index
(RPI) surged sharply from 4.2% to 4.6%. The RPI is used by wage negotiators and firms are worried that
settlements, already at a six-year high, will rise further.
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