When chancellor Gordon Brown had finished delivering his Budget statement earlier this month he had pleased most businesses with measures to reduce regulation and red tape, albeit there have been promises in the past on which delivery is still awaited.

But he also faced business with an estimated bill of more than £2bn in 2005-06, with the imposition of some tax rises, plus the introduction of “anti-avoidance” measures and removal of reliefs. And the latest Treasury figures on public finances did little to allay fears of tax rises after the expected May general election, which have sent business confidence down to its lowest level since 2003.

The bottom-end of the housing market may get a small boost from the decision to raise the threshold for stamp duty, and Halifax estimates that the move could benefit some 157,000 buyers a year. Thus, the Treasury, may help stem the slowdown in house prices.

Meanwhile on the nation’s building sites professional purchasers report another month of solid growth in February. Housing and commercial sector activity continued to expand, and civil engineering returned to growth after a two-month decline. The Chartered Institute of Purchasing and Supply reports that firms stepped up their buying in response to the increase in activity, but average material costs were higher than in January.

Construction growth

Official estimates suggest that the total volume of new construction orders placed with contractors in the three months to January rose by 5% compared with the previous three months, with increases in all areas except public and private sector housing. The volume of orders was 9% higher than a year earlier.

Private sector housing orders fell by 3% in the latest three-month period over the previous quarter, but were 8% higher than at the same time in 2003/04. Public sector housing orders fell by 32% in the three months to January and by 2% annually. Orders for commercial projects rose by 20% between the two latest quarters to January and were 10% higher year-on-year. Contracts for industrial buildings rose 4% compared with the previous three months but fell by 12% over the year. Infrastructure contracts increased by 12% between the two latest three-month periods and by 6% compared with the same time a year earlier.

Consumer confidence

If business confidence in Britain is at a low ebb, consumers are feeling little happier. The latest survey by GfK Martin Hamblin for the European Commission finds that January’s rise in confidence was reversed in February. The climate for making major purchases, such as furniture, dropped by two points, although the indicator is at relatively high levels compared to the trend over the last 12 months.

Unemployment, which is a key factor in consumer confidence, rose slightly in February. And pressure on businesses to cut costs and improve margins led to weaker growth in employment, according to the Recruitment and Employment Confederation and Deloitte. Some 76% of employers nationally plan to maintain their current levels of staffing, according to recruitment agency Manpower. In London the figure rises to 89%.

In the corporate sector, the UK’s largest furniture supplier MFI says gross margins in the first half of 2005 will be flat compared to the second half of 2004. This follows a sharp slowdown in growth at Howden Joinery, its trade supplier of kitchen furniture in the three months December to February. In its retail arm, the company says bedroom furniture sales were strong, and order growth for sofas and living room furniture was “good”.

Survey evidence from the British Retail Consortium indicates that February was difficult for furniture sales, and the CBI says that the growth in demand compared with a year earlier was almost imperceptible. Official figures show that the slowdown in retail sales growth, which began towards the end of 2004, has continued, with volumes in decline during the first two months of 2005. But the weakening may at least have the benefit of forestalling an early rise in interest rates.