'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 92.

    Beware the self-fulfilling prophecy. You will talk yourselves into recession again if you are not careful.

  • rate this

    Comment number 91.

    Those that are complaining the banks wont lend them the money they need to be able to expand etc,,, if the bank do lend you the money and these prediction come true you wont have any chance of surviving.

  • rate this

    Comment number 90.

    If all politicians are magicians, then they are of the class of Tommy Cooper, and most definately not our 'enry. Or my nan, for that matter.

  • rate this

    Comment number 89.

    If the economy is in such a mess (and I think there is much worse to come) then why has our government chosen this moment to lose £3.8 BILLION from the UK economy by heavily reducing foreign students? Is it because they were asked by voters to reduce foreign WORKERS but cannot as most come from Europe and so wish to con the voters by reducing overall immigration via student numbers? Answer: YES.

  • rate this

    Comment number 88.

    Ex Tory Voter

    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?
    But they've shown the market they are active in reducing costs and increasing profits, therefore they get a huge bonus... and thats all they care about

  • rate this

    Comment number 87.

    How long have we got before something big breaks & leaders realise that selfish greed has no role to play if we want a future ?
    Will it take a meteor from outer space to show us the way like the dinosaurs ?

  • rate this

    Comment number 86.

    In the past 10-15 years I have lost count of all the junk mail offering what seemed like ludicrous "easy loans" and credit card exchanges - most if not all without any real security checks. Is it any wonder that some folk thought "Well why not live for today"?
    The trouble is "THERE'S OWT FOR NOWT" as they say in Yorkshire.

  • rate this

    Comment number 85.

    Not surprised at all. I accept it will take time for government policies to embed and deal with our debt and boost the economy. I am concerned with the speed of new policies and how deep are the austerity cuts. A measured approach would have probably produced better results. Please also support public and Third sector otherwise there may be fewer people to buy goods produced by private sector.

  • rate this

    Comment number 84.

    Remember in the 80s their was a poster " Labour isnt working " and their was a long line of people on the dole - Well whatever you vote -the tories are definately not working and before long NOBODY will be working if they keep up their stupid austerity measures.

  • rate this

    Comment number 83.

    39. Ex Tory Voter

    “Eventually they'll make the connection - outsourcing jobs means less employed people”.

    Don’t count on it.
    They are the same ones that cut pay, reduce pensions, insist on importing skilled labour from abroad (don’t want to train KIds here) & outsource other functions.
    ...& they wonder why confidence levels are down here?
    UK PLC desperetly needs new direction.

  • rate this

    Comment number 82.

    Hardly surprising when we are on the verge of a global recession..

  • rate this

    Comment number 81.

    Capitalisms fatal heart attack, even with the most advanced technology and thinking to date, they cannot revive it, and it's corpse is begining to stink. Will someone please call the coroner.

  • rate this

    Comment number 80.

    Judging by the amount of UNaffordable housing for sale (and sticking!) the market is out of kilter and only the forces of supply and demand will eventually sort things out.
    Another factor is the expectations of many 1st time buyers who want luxury living from day 1. When we bought our first house we had 2nd hand furniture, could only afford 2 carpets and had to find 20% deposit.

  • rate this

    Comment number 79.

    It's all about confidence which has clearly plummeted in only 2 months. And in that time what progress has been made in the eurozone? none! I would borrow 100k today at 10% for my small business if I could be sure of continued growth. But I can't. the future becomes less certain with every days euro squabble.

  • rate this

    Comment number 78.

    Many people had a dream: Eat out (so almost every other shop is selling take-outs), keep buying new clothes (even if they are never worn), have many holidays (and to more and more distant locations), buy all the latest gadgets (and replace them every few months when something 'better' comes along). But they woke up and realised it was all done on money they did not have. CRASH.

  • rate this

    Comment number 77.

    Haven't we all had enough of the CBI? They moan when times are good; whine when times are bad, but still the overwhelming majority of its members manage to award themselves a better payrise than their workers every year.

  • rate this

    Comment number 76.

    >Q: What do economics, politics and Mornington Crescent have in common?

    >A: They all follow the same rules and require the same expertise to play or predict the outcome.

    And their only real purpose is to entertain us.

  • rate this

    Comment number 75.

    Liberal Engineering 41.
    I fully agree with your sentiments but am puzzled by an "in debated" economy?
    I too consider that we are looking at a decade of stagflation which cannot be resolved by "magic mirrors" or slight of hand. Greed and reckless borrowing by casino bankers,political ineptitude and profligacy by ordinary folk has led to the current economic mess. Capitalism has failed

  • rate this

    Comment number 74.

    58 Giles Jones

    Ownership is irrelevant - we are the second biggest overseas investor after the US. What matters is that British based businesses flourish. So not buying German built cars and buying Bentley, Jaguar, Range Rover, Aston Martin and British built models of Nissan, Toyota, Honda and Mini makes perfect sense if you want to help the UK economy.
    Automotive is a UK success story.

  • rate this

    Comment number 73.

    I wonder if in a thousand years people (that is if there are any left) will say how brutal our society is like we do about our past, the economics of this world do not work for the majority.
    How can we complain when our own race in other parts of the world die for lack of basics or because some dictator says so, who was probably sold weapons by the rich.


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