Business confidence drops across UK

04-08-2008

Business confidence drops across UK
Business confidence was down in all regions of the UK this month.

However, the CBI/Experian Regional Trends survey shows a slowdown in manufacturing has been held off by firm export orders, but the outlook remains downbeat.

Lai Wah Co, CBI head of economic analysis, firms have seen their costs rise in recent months, but have been unable to raise prices to consumers.

"Manufacturing confidence has tumbled over the past quarter," she said.

"The climb in oil and other raw material prices over recent months has driven costs up significantly. Although firms are having some success in passing these costs on, profit margins are under pressure."

Peter Gutmann of Experian added: "Exports are helping to limit the
slowdown in the manufacturing sector, boosted particularly by sterling's weakness against the euro.

"However, the near-term outlook for manufacturing still looks tough as the economy enters a precarious phase."

New order volumes across the UK were largely unchanged nationally, but the West Midlands saw its largest fall in orders since 1999.

The volumes of new orders, meanwhile, rose in Northern Ireland and the north-west.

The West Midlands, the south-east and London saw the greatest falls in output, while the East Midlands saw output rise.

Looking forward, the West Midlands and Scotland were found to be "extremely downbeat" about the prospects for the coming quarter.

With business outlook depressed, the Bank of England faces more pressure when its sets interest rates this week.

The slowing economy may be enough to prevent an interest rate rise, but a cut – given the high levels of inflation – seems unlikely.


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