‘Strong economic headwinds’ towards Brexit – Palmer
July 2017

The UK window industry faces strong economic headwinds and the dual challenges of a tougher second-time replacement market and wider economic uncertainty as the UK exits from Brussels, according to Robert Palmer of Palmer Market Research.

He says the post-Brexit phoney war is coming to an end and the realities of what will result in the case of a hard Brexit are now beginning to dawn. This, he argues, is already exerting an impact on consumer confidence and with it economic growth. This slowed in the first quarter of 2017 to just 0.2% - the weakest in 12 months. “The Office for National Statistics attribute this slowing to the decline in growth to consumer facing industries and a slowdown in household spending”, Palmer says in introducing the next edition of The Window, Door and Conservatory Markets in Housing in Great Britain, due for publication next month. He adds that this has also evidenced in figures from payments provider Visa, which reported the steepest fall in consumer spending for four years this summer. Visa also highlights a cut back in spending on big ticket items. 

“This is also noted by researchers GfK which recorded a major dip in the number of consumers considering now to be the right time to make big-ticket purchases.

“Consumer credit is not inexhaustible. According to the Bank of England consumer credit grew by 10.3% in the 12 months to May, higher than expected. Some economists say that consumers are confident enough to increase their borrowing. 

“But the financial regulatory bodies have signalled their concerns about difficulties some consumers will have in making repayments. With inflation rising and wages static the reality is that consumers’ disposable incomes will continue to fall. 

”Trends in housing are another area, which Palmer suggests may curb growth in the window and door sector in the coming year. He says: “The housing market has slowed, partly as a result of increases in stamp duty and changes in tax on second homes and investment properties and partly because of the availability of property.

“From strong double digit growth in 2013 and 2014 housing transactions barely moved in 2015 and 2016 and look set to actually decline in 2017 particularly in London, where issues surrounding affordability are most acute.

“This isn’t necessarily all bad news - some rebalancing and cooling of house price inflation is perhaps inevitable and to be welcomed, especially if more new homes can be built to ease issues of supply. The negative for the window and door industry is that there is a direct link to house moves and investment in home improvements.”

Palmer returns, however, to the argument that it is uncertainty surrounding Brexit which is the greatest threat to UK economic growth: “The ill-fated general election is seen by some as an opportunity to soften the Brexit terms or even, though much less likely, abandon the whole process altogether. That is debatable but what it did do is to increase uncertainty. For instance how long will May remain as PM with her hard Brexit agenda? Are the soft Brexiters now in the ascendancy? And for that expected, unexpected event, who is actually in charge?”

www.palmermarketresearch.co.uk