High inflation, now 11.1%, high energy costs, and war in Ukraine are tipping the world into recession. In Q3 we saw a further softening in market demand.

General construction and infrastructure are experiencing a slowdown, as is RMI which affects timber volumes. National housebuilders report slowing order files, as a surge in mortgage rates causes home buyers to delay their purchases, and housebuilders are scaling back their build programmes. The boom in middle to budget home improvement projects has stalled as consumer confidence reels from the turmoil and uncertainty, although demand at the upper end of the market is largely unaffected.

Rising energy costs are impacting the timber products most in demand from end-user customers. Wood fibre prices are surging thanks to European manufacturers searching to fill the gap left by the Conflict in Ukraine along with higher demand for biomass products for wood-fired boilers which are now more economical to run than fossil fuel alternatives.

UK manufacturers working with timber are under immense pressure with rising input costs, particularly energy, resin and wood. With high inflation, there is a reluctance to put prices up further, particularly as volumes have fallen, but there may be no other way to protect margins and remain profitable.

What of next year? We live in uncertain times. The Truss Government promised £50bn of tax cuts and spending that triggered an economic and political crisis. Three months later, a new Prime Minister and Chancellor reversed course with £55bn of tax rises and spending cuts, pushing us into recession and what looks like Austerity 2.0. Britain’s reputation for economic competence was salvaged by the correction, but at what cost to growth, productivity and living standards?

With the 20th Housing Minister of the last 20 years or so now learning the ropes, where does this leave construction, and timber and wood based panel products? Every household and business is having to rethink its plans for the future. In more normal times the implications of the Autumn Statement would seem devastating, but over the last three years construction has learned resilience and not much phases it. It’s also learned that not much is fixed and with a general election two years away, there may be more to cheer about.