The head of British builders merchant and do-it-yourself retailer Travis Perkins said increasing consumer confidence is the key to any UK economic recovery, though a direct injection of funds into their pockets is not the answer.
In my view we need to stop spending bad money and start spending good money. Just giving consumers the ability to spend more money is a bad thing, Chief Executive Geoff Cooper told Reuters in an interview on Monday.
Were we to spend more money we should be boosting areas of the economy which generate domestic activity and domestic production. From that point of view construction's an ideal thing to do, investment in infrastructure, investment in housing, he said.
Speaking at the firm's depot at Vauxhall, south London, the capital's busiest builders merchant's yard, Cooper said his wish list for Finance Minister George Osborne's autumn statement on November 29 would include the re-introduction of mortgage interest relief for first time buyers to stimulate the housing market and measures to boost the consumption of green building products.
I would tend to the view that we shouldn't worry too much about direct action to boost consumers' wallets, I think we should do things to boost consumers' confidence because I think confidence is a big problem at the moment, he said.
Fear of unemployment and fear of things getting worse is constraining a lot of people.
UK retailers' views differ on what they want the government to do. Some such as Terry Duddy, CEO of Argos owner Home Retail, want immediate tax relief to put more money in consumers' pockets. Others, such as Next's Simon Wolfson want the focus to be on the supply side of the economy.
Cooper said he expected the UK to escape a double dip recession even though the risks have increased to the downside in recent months as the European sovereign debt crisis has deteriorated.
No one should believe that the recovery's going to bounce back very quickly, it will be a slow grind from here, he said.
TO OUTPERFORM MARKET IN 2012
Travis Perkins also trades as Keyline, CCF, City Plumbing and Benchmarx, competing with groups such as Wolseley, and owns Tile Giant and Wickes, competing with the likes of Kingfisher's B&Q and Topps Tiles. Last year it bought plumbing and heating group BSS for 800 million pounds.
Looking to 2012 Cooper said he is confident Travis Perkins will continue to outperform an overall UK merchanting market he anticipates will be down a low single digit percentage in volume terms and an overall home improvement market he anticipates will fall about 7-8 percent.
Taking market share is essential for anyone in our sector that wants to do well, he said.
Last month Travis Perkins posted a 5.9 percent rise in underlying turnover for the nine months to the end of September.
With overall market sales not expected to rise in 2012, operating costs going up and product cost inflation still coming through but with consumers reluctant to accept price increases, Cooper reckons conditions are ripe for further consolidation in Travis Perkins' markets.
I think that represents a slow strangulation of weak players in the sector, he said. I do think there is a prospect of further consolidation amongst merchants, in particular, and probably amongst independent DIY retail.
The CEO said Travis Perkins remained interested in expanding by acquisition if the right deal was on the table.
I just think at the moment with markets likely to contract next year it would be difficult to assess whether something really was a good opportunity.
Shares in the firm, which have lost 22 percent of their value over the last six months, were up 0.5 percent at 856.75 pence at 1443 GMT, valuing the business at about 2.08 billion pounds.
(Editing by Mark Potter)