UK firms are expecting to reduce both output and hiring this quarter, according
to a survey conducted by the Confederation of British Industry (CBI).
Activity has been flat or falling since the middle of 2022, reflecting a
prolonged period of stagnation.
The survey suggested that sentiment among businesses dipped in the aftermath of
the Government's Autumn Budget.
Some businesses said that the tax rises had resulted in them reviewing their
budgets at short notice and taking steps to mitigate higher costs.
Plans include raising prices to pass on additional costs to clients, trimming
investment plans and cutting staff to reduce business expenses.
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.
Alongside plans to cut staff and raise prices further, this risks an
increasingly awkward trade-off for policymakers.
'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.
'There is an urgent need to get momentum back into the economy. The
government can help shift the UK's economic narrative with more determined
focus on measures that could drive growth.'
Internet link: CBI