Merchants will have to be “absolutely at the top of their game” if they are to survive the economic rigours of 2010, according to Geoff Cooper, chief executive of Travis Perkins.
Speaking at an event organised for members of the business press, Mr Cooper said that while some markets, such as general repair work and housing have stabilised or are “coming back”, the commercial and industrial sector is “negative and falling further”.
Forecasting is extremely difficult and is likely to become even more so in the weeks prior to the General Election. “The election is ever more difficult to call and this has an even more opaque influence on the economy,” he said. “However, we believe that housing will bounce back in 2010, but the consumer will be hard pressed and the retail market will contract by another 4-5%.”
He also predicted that, regardless of which political party is elected, due to the lag in the market, public sector-funded programmes will continue at “quite a high level” through to the end of 2011. “Even if a new government came in on May 7 and took a knife to public spending, the existing business would carry through to 2011.”
While consumers and businesses had benefited from low interest rates, he warned that there would be a squeeze on working capital and the “free gifts of 2010” would disappear. He added that he thought the 5% VAT rate sought by the building industry “would never happen – indeed, it’s more likely to rise to 20% in June”.
Travis Perkins remains optimistic, however. “TP is performing well and has increased market share,” he said. “It has the highest operating margins of any of its competitors.”
And, he said, the long-term recovery would be driven by ever-present “natural demands” forcing construction. “Life goes on and life events force turnover in the housing market.”
