'Sharp fall' in business confidence, says CBI

Land Rover assembly line Land Rover recently created 1,000 jobs at its Solihull factory, but many businesses are less confident

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Firms are reviewing investment plans after a "sharp fall" in confidence among senior business leaders, according to research by the CBI.

The CBI interviewed 122 business people and found 70% were less optimistic about the future than in August.

Two out of five were freezing recruitment or laying off staff.

The Treasury said the government deficit reduction plan had "placed the UK ahead of the curve and helped to protect businesses".

However, shadow business secretary Chuka Umunna said the findings were "deeply concerning".

CBI director general John Cridland, speaking on the eve of the organisation's conference, said it had been a year of "disappointed expectations", with the eurozone crisis adding to the problems of British businesses.

While Mr Cridland supported the coalition government's determination to cut the deficit, he urged the Chancellor George Osborne to unveil a "Plan A Plus" in his autumn statement later this month.

"We're at a critical tipping point, with the eurozone crisis reaching a crescendo and UK growth forecasts being revised down," said Mr Cridland.

"The chancellor needs to use his autumn statement to boost business confidence with game-changing new ideas," he added.

The CBI leader said the government should bring forward certain infrastructure projects, which would "leverage" billions of pounds of private sector investment.

'Heavy lifting'

"The chancellor has to announce plans for growth and the government needs to do more of the heavy lifting which is needed. There is no support for additional public spending because we think that would reduce growth rather than enhance it," he added.

Businesses gave their reasons for pessimism as the eurozone crisis, weak consumer demand, slow growth and instability in the financial markets.

But four out of five business leaders supported the government's deficit reduction plans.

Ian McCafferty, the CBI's chief economic adviser, said uncertainty about the eurozone and other factors had affected confidence and he added: "Firms are holding off taking on new staff."

A Treasury spokesman said: "The government is using every lever at its disposal to protect the UK economy and make sure that it remains a relative safe haven in the face of international instability and uncertainty in the euro zone.

"We are also tackling structural issues that will create the right conditions in the long term needed for strong and sustainable growth.

"Underpinning this is the government's deficit reduction plan, which has placed the UK ahead of the curve and helped to protect businesses and families by keeping interest rates low.

Other countries have not taken these difficult decisions and are now feeling the effect of weakened market confidence," he added.

Mr Umunna said: "Labour's five point plan for jobs and growth would get the economy moving again and boost business confidence now by bringing forward infrastructure projects, temporarily reversing the government's VAT hike to help spur the retail sector and providing a tax break for small firms taking on extra workers."


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  • rate this

    Comment number 12.

    "The Treasury said the government deficit reduction plan had placed the UK ahead of the curve and helped to protect businesses."
    It patently has not and what does not help is government vascillating on what needs to be done.
    Using money bailing out the banks was a big mistake and should have been used to kickstart consumer spending.
    Whatever the government does now will be too little too late.

  • rate this

    Comment number 11.

    Awww, really? Wonder why? Maybe it’s because they see the writing on the wall – something the gov is choosing to ignore.

  • rate this

    Comment number 10.

    But VAT man and The Boy Blunder promised the nation that the loss of public sector jobs would be taken up by the private employer. Well, surpsrise surprise! The public sector is affordable, roping-in take evasion would wipeout the deficit but the current government doesn't want that to happen, at least not to the cost of its voters.

  • rate this

    Comment number 9.

    What puzzles me is that the opposition parties seek to make political capital about issues like this. This attention seeking behaviour is tedious.

    No-one knows the precise answers, because as Steve Coppell said just before he left Bristol City Football Club, "there are just too many variables."

  • rate this

    Comment number 8.

    A fall in 'confidence' to the parasites that live off inflation, subsidies, distorted markets, and taxpayers' money may reflect a feeling that the 'game' as we have known it for two generations is over.
    For those prepared to innovate, compete on price and trade abroad the outlook is good - as long as they can avoid the attentions of the parasites. But could the latter now be most of society?

  • rate this

    Comment number 7.

    My company is still taking people on but only agency workers. Also theres been some loss of work to india and the far east and I think this will continue. I will be having an austerity Christas and will wrap it all up for less than a 100 pounds. With rubbish pay rises for nearly 5 years now and high inflation this will be a bleak christmas for the retail sector. Time for a plan B and soon please.

  • rate this

    Comment number 6.

    "Sharp fall in business confidence"????? Took them long enough to catch up with the rest of us...so what planet have they been living on then? Ye gods, three more years of this rubbish. Heaven help us all.

  • rate this

    Comment number 5.

    Well if the CBI think we're knackered, then I guess we're knackered. 70% eh!, well I could always go with the 30% if I didn't like that. Which one do you most believe?.

  • rate this

    Comment number 4.

    First, we get hit by an incompetent Labour government who threw money they didn't have at everything in sight. Then, along come the bankers and screw it all up. Not content with the damage done, we then get the political farce that is the eurozone piling in to knock us all unconscious. If you take all the politicians and some bankers away, life would be just fine. Time for major change, I think!

  • rate this

    Comment number 3.

    Until the Eurozone crisis reaches a conclusion things are not going to improve. Uncertainty makes it impossible to plan ahead so businesses will remain very cautious and continue to plan for the worst.

  • rate this

    Comment number 2.

    With the continued reductions to my wages, I’ve had to put on hold indefinably plans I had; all this despite my Companies profits rising.

    Businesses need to understand that by cutting salaries, the public’s confidence is falling & business confidence along with it.
    If you aren’t willing to be part of the solution, please don’t complain about the problem.

  • rate this

    Comment number 1.

    It speaks volumes for the Govt that even their friends in business now doubt their economic poilcy (if you can call it a policy)......

    ......the economic incompetance of the current administration is unreal - and let us not foregt the UK economy was turning upwards at the election and rapidly slowed, well before the Euro crisis kicked in.....


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