The Bank of England‘s 0.25% hike in interest rates to 4.25%, designed to cool house prices and consumer debt, has not taken the timber industry by surprise.
Paul Hampden-Smith, finance director of Travis Perkins plc, said: “It’s no great surprise, we thought it was coming, along with everyone else.
“But, obvsiously, at some stage it will start to bite in, which we reckon will be about 5%. The individual increases do not affect people’s behaviour very much.”
Mr Hampden-Smith said Travis Perkins’ business should not be affected and predicted rates would hit 5% next year.
Mark Silverman, managing director of S Silverman & Son (Importers) Ltd, said: “If interest rates were to rise 0.25% on a monthly basis I’m sure that would have an impact on the business but it would have to be continual incremental increases to have an impact. This rise was so well flagged up in advance I just do not think it’s going to have an effect.”
Mark O’Brien, head of public affairs at the Timber Trade Federation, said: “The bank is facing the delicate balancing act of trying to curb consumer spending and high housing inflation without causing a recession.
“The real problem, however, lies in 11 Downing Street, with the goverment shoring up economic activity with unsustainable long-term spending plans over which the bank has no control.”
The Construction Products Association urged caution about further rate increases. It said higher rates could hamper the “hesitant recovery” in UK manufacturing by adding to investment costs and undermining overseas trade by putting further upward pressure on sterling against a weak US dollar.
