CBI survey points to a soft landing
Wednesday 27 January 1999
But Kate Barker, CBI chief economic adviser, argued that a further half- point cut in interest rates was still needed if the economy was to avoid outright recession.
The Governor of the Bank of England warned separately that unemployment would rise in the coming months as the economy slowed.
Giving evidence to a House of Lords committee, Eddie George said the rise would not be dramatic, although it would help ease inflationary pressures.
The recent slowdown in consumer spending was largely attributable to "a shock to confidence," the Governor said, adding that he hoped that interest rate cuts had helped address that problem.
According to the quarterly Confederation of British Industry (CBI) industrial trends survey, business confidence among manufacturers jumped by 18 points between October and January.
Confidence among exporters for the coming year was also markedly less pessimistic, the CBI said.
Yet with 40 per cent of manufacturers still expecting business conditions to deteriorate in the coming months, overall confidence levels remained weak.
"It is too early to say whether manufacturing is bottoming out", Ms Barker said, adding that the survey was completed before the Brazilian devaluation, which sparked another round of jitters in the financial markets.
She predicted the loss of another 41,000 manufacturing jobs in the first quarter of 1999, and expressed concern about falling prices.
"There are strong indications of deflation in the manufacturing sector, with prices expected to fall at the sharpest rate since 1958," she said.
Ms Barker said there was scope for interest rates to fall as low as 5 per cent - one percentage point below current levels - by the spring.
Few City analysts believed the survey would be a barrier to further interest rate cuts at next week's meeting of the Monetary Policy Committee.
Adam Cole at HSBC Securities said: "I think if anything I would have expected a bigger improvement in sentiment, and the survey was a bit disappointing. ".
- 1 Autism 'caused by genetics', study suggests
- 2 What happens to your body when you give up sugar?
- 3 Why you should never make assumptions about people with autism
- 4 Tourist films plane's descent just metres above packed Caribbean beach
- 5 Have sex with your iPad thanks to the new sex toy no-one asked for
Tourist films plane's descent just metres above packed Caribbean beach
Bali nine: Welcome to 'Execution Island' – the Indonesian holiday resort where foreigners are sent to die
How Homer Simpson discovered the Higgs boson over a decade before scientists
The 'sex selfie stick' lets you FaceTime the inside of a vagina
Harrison Ford plane crash: Star Wars actor 'seriously injured' after light aircraft crash lands
Durham Free School: 'Creationism taught at' free school facing closure
Nearly 100,000 of Britain's poorest children go hungry after parents' benefits are cut
End of the licence fee: BBC to back radical overhaul of how it is funded
Ex-head of MI6: 'We shouldn't kid ourselves that Russia is on a path to democracy'
Most people think legal tax avoidance is just as wrong as illegal tax evasion, poll suggests
Nigel Farage promises Ukip will not 'stigmatise' would-be migrants – and says he wants 'everyone to speak the same language'
iJobs Money & Business
£13000 per annum: Recruitment Genius: This is an exciting opportunity to join ...
£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...
£8 per hour: Recruitment Genius: This Pension Specialist was established early...
£30 - 35k + Bonus & Benefits: Guru Careers: We are seeking an Executive Assist...