British companies fear a “significant fall” in their trading prospects over the next few months, raising concerns about further job losses and derailing Labour’s ambitions to reboot economic growth.
A survey by the CBI found that a net 22 per cent of private sector firms expect their output to drop between now and April, matching the downbeat sentiment recorded in December — the most pessimistic reading in more than two years. Activity has been flat or falling since mid-2022.
Alpesh Paleja, interim deputy chief economist at the CBI, said: “After a grim lead-up to Christmas, the new year hasn’t brought any sense of renewal, with businesses still expecting a significant fall in activity. Anecdotes suggest that companies are being hit by lacklustre demand and caution among consumers, while also continuing to adjust to measures announced in the budget.”
The relationship between government and industry has been under strain since last October’s budget, which introduced higher national insurance contributions for employers. Official figures last week showed that staff numbers are being cut at one of the fastest rates since the 2009 financial crisis.
Analysts say that companies are likely to raise prices again this year while jobs are at risk, especially in the business services and consumer-facing sectors. Separate studies echo the CBI’s findings, with consumer confidence hitting its lowest level in a year and businesses recording a two-year low for optimism.
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