24th November 2017

General Business News Plimsoll

A Plimsoll Analysis of the 2017 Autumn Budget

Philip Hammond’s latest Autumn budget has promised a plethora of initiatives aimed to help families cope with the cost of living.

A closer look into the Chancellor’s budget reveals plans to abolish stamp duty for some first-time buyers while also promising to build 300,000 new homes a year.

The UK Housebuilders industry

Share prices were understandably buffeted by news that “land banking” will come under pressure as a way of encouraging housebuilding. However, as recent studies show concerns about this practice have been politically overblown. In such a high demand market, most builders are already building on plots where they have planning permission. So without reforms of the planning process to increase land to build on, the latest review announced in the Budget (the fifth of its kind since) might be another waste of time. While short term sentiment might be affected, Plimsoll doesn’t consider this will have any long term impact. The biggest determinant of success will be financial longevity.

Plimsoll’s latest study into the financial health of the UK housebuilding industry, suggests the market is well placed to cope with extra demand. For many companies it will be a welcome boost. 31% of the market is in a state of financial distress. A £44bn bonanza of additional demand bringing extra revenue and rising prices should allow many to get their financed back on track. Relaxation of planning in densely populated urban areas and new money for SME builders should see that boost shared around the market. However, unless these ambitious words are backed by solid action, the same choking of the market will persist and the companies with the biggest financial pressure will continue to suffer.

Results from the new Plimsoll Analysis reveal, on average, each company is recording sales growth of 5.5% while average pre-tax profit margin is at a healthy 4.6%. Further results also indicate over a third of companies in the market are demonstrating excellent financial health.

The UK’s largest 909 housebuilders have been analysed in the latest analysis and more information can be found by clicking here.

National Living Standard

Much has been made about the fall in living standards – despite the Government changing the income tax threshold and other fiscal policies announced in the Budget.

Detailed research has also discovered the UK industries which have seen the biggest increases/decreases in salaries over the last 12 months. Clearly some industries such as the Offshore and Energy sector have seen as slump in wage growth in line with the collapse in market prices.

Elsewhere, the biggest increases have been in specialist service based markets serving the consumer. This further reflects the UK’s reliance on consumer spending and the mighty service sector.

To find out more about the industries outlined in the chart above please visit the Plimsoll homepage or alternatively contact Chris Glancey on the details below.

Tel: +44 (0) 1642626419 | E: chrisg@plimsoll.uk