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 Jeremy Clarkson 'sees no problem' with his racist language on Top Gear, says BBC
- 2 'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
- 4 London restaurant 34 creates champagne glass modelled on Kate Moss’ left breast
- 5 ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
'Alien thigh bone' on Mars: Excitement from alien hunters at 'evidence' of extraterrestrial life
Russell Brand opposes anti-Semitism after death threats: 'We must disavow all forms of prejudice that lead to exclusion and execution'
James Foley 'beheaded': Isis video shows militant with British accent 'execute US journalist' – as hunt begins for killer
ALS ice bucket challenge co-founder Corey Griffin drowns, aged 27
Microbial life found living on the exterior of the International Space Station, say reports
Richard Dawkins on babies with Down Syndrome: 'Abort it and try again – it would be immoral to bring it into the world'
Scottish independence: English people overwhelmingly want Scotland to stay in the UK
Isis threat: Cameron wants an alliance with Iran
Michael Brown shooting: Chaos erupts on the streets of Ferguson after autopsy shows teenager was shot six times – twice in the head
Disgusting, frustrating, but intriguing: how the country really feels about its politicians
Bin bag full of cats' heads discovered near Manchester's Curry Mile
iJobs Money & Business
£30000 - £40000 per annum + benefits+bonus+package: Harrington Starr: C#.NET ...
£20000 - £30000 per annum + benefits+bonus+package: Harrington Starr: Junior D...
£550 - £650 per day: Orgtel: Business Analyst - Traded Credit Risk - Investmen...
£55000 per annum: Harrington Starr: A financial software vendor at the forefro...