'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
    +1

    Comment number 52.

    If we all bought British goods that would mean increased production for British industry that would mean employing more British people to meet increased demand who would then have money to spend in the local economy and help the British money go round, do you think this would help or shall we just keep supporting Chinese industry and blaming our politicians.

  • rate this
    +11

    Comment number 51.

    This whole sorry story has it's roots not in the past 10 years but goes back to early 1980's to the Thatcher Government's total destruction of our manufacturing base, work ethics and working practises, yes reform was needed, yes Union power was out of control, the solution was to solve the problems not destoy the "Goose that laid the golden egg", the 80's laying waste of industry is the problem.

  • rate this
    +10

    Comment number 50.

    'Sharp fall' in business confidence, says CBI.

    With over half my wage being paid out in rent to a private landlord, I can't help but wonder why people like me are not out spending on the high street?

  • rate this
    +2

    Comment number 49.

    37,...Krokodil,......If Cameron says " We are all in this together ", isn't that socialism?. Or did he mean, " You're my friend when I need you, My fool when I tell you "

  • rate this
    +3

    Comment number 48.

    With all public sector workers facing job uncertainty and real reductions in take home pay through this coalition government's imposed higher pension contributions, you cannot expect much help with retail sales from those people. The private sector, which the government says it is invigorating, should be able to make up for it. That's Plan A isn't it?

  • rate this
    0

    Comment number 47.

    We 've been here before, many times.
    CBI and unions stating the bl.....g obvious about the lack of demand, lack of jobs, loans, whatever. Offering impractical solutions.
    We know all that.
    We might do a lot better promoting some successes and getting our heads down finding ways to compete that don't involve govt subsidies or taxbreaks.
    The world market isn't going to change to suit us.

  • rate this
    +5

    Comment number 46.

    "38.Broadwood Widger

    The last person to try that was Margaret Thatcher who brought in a systems analyst, the first person to really understand the UK economy."

    Hardly - she created a permanent underclass, and had no plan on how to deal with it. No government of either party, including the current one, has since addressed that, seeming hoping the problem will simply go away if ignored.

  • rate this
    0

    Comment number 45.

    @37dildocroc
    Of course things are tough. Although we all still have money in our pockets and there are still jobs available. Cuts were needed and compared to many countries we are quite well placed.

    Just remember well; socialism is not the answer.

    And capitalism is, you crazed delusionist?
    More of the same is your recommendation then?

  • rate this
    +3

    Comment number 44.

    1.Little_Old_Me

    "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"

    The UK economy endured a huge, sharp rise in unemployment during Labour's last years in charge.

    Austerity hurts but so does the Euro farce. Let's not get all dewy-eyed over Labour

  • rate this
    +5

    Comment number 43.

    Funny how the CBI are happy to use tax payers money to fund private investment yet are dead set against tax payers money to fund public services !

  • rate this
    +1

    Comment number 42.

    Alan T,....23........Isn't that the lib Dems?,... If not,.. why not?. Have I been lied to?.

  • rate this
    0

    Comment number 41.

    Finally business leaders are realising that you can't borrow your way out of a high tax, low turnover and heavily in debated economy.

    We are looking at a lost decade until a significant chunk of the Public and private debt is repaid. It will likely be stagnant for the next 3-5 years at least.

    We may even get to see hyperinflation in parts of Europe, again.

    Mugabenomics anyone?

  • rate this
    0

    Comment number 40.

    Both the government and individuals have been spending money we haven't got and far too much of it on goods made in other countries. Now we have to cut back to a sustainable level and it's going to be painful and take longer than most expect. Most businesses know that domestic spending is going to be weak and are therefore careful about over ambition.

  • rate this
    +31

    Comment number 39.

    Eventually they'll make the connection - outsourcing jobs means less employed people, means less people with money to spend, means less sales, means less profit. If no one has a job, how can they buy their service or product?

  • rate this
    0

    Comment number 38.

    @ 13 Rik

    "... bring in a group of mathematicians, economists, and academics to sort it all out,"

    The last person to try that was Margaret Thatcher who brought in a systems analyst, the first person to really understand the UK economy.
    Few people liked taking the medicine to cure the problem but it did work until we had the a labour government in power who awarded themselves several pay rises.

  • rate this
    +1

    Comment number 37.

    Of course things are tough. Although we all still have money in our pockets and there are still jobs available. Cuts were needed and compared to many countries we are quite well placed.

    Just remember well; socialism is not the answer.

  • rate this
    +3

    Comment number 36.

    Re Old Person (19) describing the public sector as 'not affordable and ludicrously inefficient' is a bit of sweeping generalisation and not terribly helpful. Given the size and scope of the public sector (health, education, defence, police, fire service, courts, libraries etc), you'll find a wide variation in performance. My own experience has certainly ranged from the sublime to the ridiculous.

  • rate this
    +5

    Comment number 35.

    This is simply Business Leaders trying to build up pressure on Osborne to put "Plan A+" into his autumn budget, nothing less.
    They (quite rightly) want more action from the Coalition to support the private sector so that jobs growth can continue and, hopefully, increase.

    Of course, we have the usual Balls supporters demanding more borrow, tax n spend, which is what got us here in the first place

  • rate this
    0

    Comment number 34.

    It's a farce watching these people who think they know what they are doing thrashing about trying to get an economy that was dysfunctional when it was good going again. Putting this straight is beyond the public school parasites that have manipulated their way into power. Consumerism is dead but they just dont realise it or wont face it. Their day is over and we need newer fairer ways to live.

  • rate this
    +7

    Comment number 33.

    21. Gateleyjk
    The “Experts” in the Banking Community & the CBI already pull the chains in Government; the “Rank Amateurs” do as they are told.
    Perhaps we have been listening to the experts for too long.
    Unfortunately, the CBI has always wanted everything its own way & doesn’t want to face up to its part in this problem or playing its part in the solution.

 

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