28/04/2003

CBI issues call for interest rate cut

The CBI has called for a cut in interest rates on the back of a report, published today, indicating a dramatic fall in manufacturing orders.

In its Quarterly Industrial Trends survey, the CBI say it is "particularly worrying" that, with a deterioration in domestic demand, orders have fallen at the fastest rate since April 1999. The CBI now predict that the pace of job shedding over the next four months is expected to accelerate to the fastest rate for a year.

The survey shows that 37% of firms reported a fall, while 16% saw a rise – equating to a negative balance of minus 21% compared with minus 9% in the January survey. The fall in domestic orders was "greater than expected", registering a negative balance of minus 23% - comparing to minus 13% last quarter. Total orders, say the CBI, are expected to continue falling sharply over the coming months.

The CBI concluded that the weakness in global trading conditions has spread to the home market. And despite the negative – but extraordinary – impact of the war in Iraq, this is the third consecutive survey to register a fall in manufacturers' confidence.

Digby Jones, CBI Director-General, said: "The end of the Iraq conflict will steady nerves. But the world's economic problems were there before the war and they are still there now. Manufacturers hoped that domestic demand would hold up until there was a pick up in global trade but that does not seem to be happening.

"This has been compounded by a slowdown in other parts of the economy, most worryingly in consumer spending. It would be wrong to overstate the situation - we are not predicting a recession at all. But the time has come for another cut in interest rates to see us through this difficult patch. The prospects for a sustained recovery appear a long way off and signs of inflation in the wider UK business sector are rare."

Firms continue to report intended cuts in capital expenditure over the next 12 months, largely due to over capacity, demand uncertainty and pressure on profit margins. Planned investment on innovation and training is flat following the modestly positive intentions reported in the previous survey.

The survey of 937 manufacturers was carried out between March 20 and April 9.

(GMcG)

Related UK National News Stories
Click here for the latest headlines.

30 June 2003
Service sector pay awards fall: CBI survey
Pay awards in the service sector have crept down to their lowest level for nine years, according to the latest survey of pay settlements published today by the CBI. The survey shows service sector pay settlements averaged 2.8% in the three months to April 2003, while they stood at 3.1% in January and 3.2% in April last year.
29 May 2013
Retail Sales Fall Sharply In May
A survey by business group CBI has said UK retail sales fell at their fastest annual pace for 16 months in May. It added that sales of clothing and footwear fell from a year previously as consumers continued to cut back on their spending. Grocery sales remained flat over the same period.
04 May 2005
CBI reports retail sales drop
The volume of retail sales has fallen in the year to April, according to the CBI’s monthly Distributive Trades Survey. The survey found that nearly half of retailers (46%) reported a drop in sales volume, compared to 32% who reported a rise in sales; a balance of -14%, compared with a figure of -9% in last month’s survey.
20 June 2003
Poor demand deepens manufacturing woes
There is no sign of a manufacturing recovery with weak domestic and international demand blocking the sector's long-awaited turnaround, according to the Confederation of British Industry (CBI).
22 July 2003
Manufacturing stifled by 'relentless' downturn
The "relentless" downturn in UK manufacturing and continuing falls in orders, output and employment is crippling the industry, according to the latest CBI Quarterly Industrial Trends survey, published today.