Industry Opinions
Inflation pressures, tax rises and stalled projects cloud Q3 outlook
Inflation, interest rate cuts, tax hikes and project backlogs. Ryan Johnson, Group Manging Director, the Emplas Group asks will Q3 be any better?
Running a business is always challenging. The last nine-months have been particularly tough.
The consensus is that by the end of this year, the UK economy will have grown by around 1.2%, a downgrade on previous growth forecasts.
At the same time, inflation remains stubbornly high at 3.8%. This makes it more likely that the Bank of England, which cut interest rates to 4% in August, will exercise increased caution when it reviews rates through to the end of this year.
The labour market is also becoming tougher. Unemployment is currently at 4.7% as businesses adjust to increased employment costs – something which may negatively impact consumer confidence in the coming months.
This has been the backdrop to construction growth this year of around 1.9%. It’s a positive figure but certainly not the boom that we expected to see.
That’s attributable in part to continuing delays at Gateway 2. Averaging 25 and up to 36 weeks to get scheme approval, the Building Safety Regulator has been in a state of meltdown for months.
The new Fast-Track approvals route, which should come online this autumn may provide a glimmer of hope – but the backlog is going to take time to clear, which pushes growth further down the line into 2026.
The housing market is also subdued, with house price inflation sitting at around 1% – again, we’re in positive figures but still no boom, with some analysts predicting that growth will be pushed back to 2027.
Combined with still fragile consumer confidence, it’s pushed rebound in the home improvement sector back, with pressure on household budgets impacting discretionary spend.
This makes the autumn budget in either late October or November critical. Will it be painful? That will largely be down to the Chancellor but with spiking borrowing costs and a fiscal shortfall of as much as £41bn to bridge, if I was going to lay a bet, I’d say we need to brace for more increases.
It’s worth taking time to reflect on these issues, because if we do, we can prepare for them. Hoping that things may get better, isn’t a strategy.
This has informed our approach. We do believe that things will improve but we are approaching the run into the end of this year as we started it – and that’s with a dose of reality.
Our assessment at the start of 2025, that while improving, things were going to remain tough, has driven our strategy this year. It’s included major investment in the launch of our new retail lead generation initiative, Snug, which delivers homeowner leads direct to qualifying customers.
We’ve also launched The Commercial Window Group to do the same in the commercial space, generating more than £60milion of tenders – delivering millions of pounds of new business for network members.
We’re continuing to invest in our product offer. We added BRiTDOR and GRiPCORE composite door composites to our pre-existing ORiGINAL Door Collection, as well as the imminent launch of a new and fully accredited Fire Door.
We’ve invested in our manufacturing facility, increasing efficiencies and lowering our carbon footprint through the installation of 1558 new solar panels; and in digital tools to support our customers in managing their businesses more effectively, including EVA CRM.
In short, we recognised that innovation and investment would be the drivers of growth rather than a release of demand in home improvement, new build or commercial sectors – and its worked.
We’ve continued to grow, and we will continue to invest, so that when things do pick up, which they will, we and our customers will be positioned for growth.
