CBI slashes its growth forecast as exports fall
Friday 21 February 1997
But the growing gap between manufacturing and the rest of the economy was highlighted by a rise in consumer confidence to its highest level since August 1988. This followed news earlier in the week of a rebound in high street sales last month.
Expert opinion was just as divided. David Bloom, an economist at broker James Capel, said: "The broad trend in the economy is up. Not raising interest rates now is storing up trouble for the future."
But Dharshini David at HSBC Markets predicted a fragile manufacturing recovery, with the CBI survey pointing to a possible dip in output this month. The CBI trimmed its forecast for growth in 1997 to 2.8 per cent from 3.1 per cent, making it one of the most pessimistic predictions for the economy this year. Weaker output, investment and exports account for the reduction.
Sudhir Junankar, the CBI's associate director of economic analysis, said: "The main uncertainty around our forecast remains the level of sterling, which has risen sharply since last summer and is set to hold back the growth in manufacturing and exports this year."
The latest monthly survey of manufacturers found a drop in export orders, with the balance of firms reporting higher orders down to minus 12 per cent from minus 8 per cent. The total order book was unchanged between last month and this, however.
Manufacturers' output expectations increased for the second month running following a fall in December. "However, firms remain fairly upbeat about stepping up production in the coming months, as home demand for manufactured goods continues to hold up," Mr Junankar said.
The clearest sign of the impact of the strong pound came in lower expected price rises. Although prices normally slow after the traditional January increases, the balance expecting to raise rather than reduce prices dropped sharply from 16 per cent to 4 per cent.
The CBI still expects interest rates to rise by half a percentage point after the election, and the reason could be seen in yesterday's consumer confidence survey.
The survey, carried out for the European Commission by GFK, showed confidence on a rising trend and back at its highest level since August 1988. Optimism about prospects for the economy dipped slightly but this was more than offset by a surge in optimism about personal finances. This was especially pronounced among young people.
"With building society windfalls in the pipeline, confidence can only improve further," said John O'Sullivan, an economist at NatWest Markets.
International Women's Day 2014: The shocking statistics that show why it is still so important
Malaysia Airlines: Search for true identity of passengers with stolen passports launched as terrorism concern grows
Singapore sting: Sky-high prices are pushing locals to the edge of affordability
International Women’s Day: 'When a man gives his opinion, he's a man. When a woman gives her opinion, she's a bitch' - feminist quotes from female icons to inspire you
Dead woman's body found sitting in a car after six years after direct debits ran $54,000 bank account dry
Britain's top vet sparks controversy with call for ban on slashing animals' throats in 'ritual' slaughters for halal and kosher meat products
Ukraine crisis: Russia dismisses '3am ultimatum' as 'total nonsense'
If you're horrified by a flame-roasted dog, you should be shocked at a hog roast
Poor 'live like animals' says Boris's privately educated sister after going on 'poverty safari'
White people become less racist just by moving to more diverse areas, study finds
Exclusive: Impact of immigrants on British workers ‘negligible’
- 1 International Women's Day 2014: The shocking statistics that show why it is still so important
- 2 Orgasm machine to deliver climax at the push of a button
- 3 Teacher shows sex tape featuring herself to pupils during class by mistake
- 4 Singapore sting: Sky-high prices are pushing locals to the edge of affordability
- 5 Liam Neeson turned down James Bond role because late wife Natasha Richardson said she wouldn't marry him if he took it
iJobs Money & Business
£12000 per annum: Inspiring Interns: The company works with Tier 1 FTSE 100 Ba...
£32000 - £36000 per annum + generous benefits: Pro-Recruitment Group: * TAX * ...
£37000 - £40000 per annum + £20000 benefits package: Pro-Recruitment Group: **...
£30000 - £35000 per annum + generous benefits: Pro-Recruitment Group: Mixed Ta...