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 British tourists 'murdered' in Thailand: Pair's bloodied bodies found naked on Koh Tao beach
- 2 Vivienne Westwood says 'Yes' to Scottish Independence by declaring: 'I hate England'
- 3 Welcome to Cameroon, where drinking Baileys can lead to imprisonment
- 4 Lego breaks out of the toy box and heads for the gallery
- 5 Vogue under fire for 'Big Booty' article
British tourists 'murdered' in Thailand: Pair's bloodied bodies found naked on Koh Tao beach
Jihadi John': MI5 may have identified Isis militant who killed David Haines but options limited
Vivienne Westwood says 'Yes' to Scottish Independence by declaring: 'I hate England'
David Haines beheading: David Cameron says Britain will hunt down Isis 'monsters' shown in video murdering aid worker
Piers Morgan attempts to save the Union by promising to go back to the US if Scotland votes 'No' to independence
Daniele Watts: Django Unchained actress detained by Los Angeles police after being mistaken for a prostitute
The political class is doing what Hitler couldn’t – destroying Britain
Scottish independence: Nationalist leader Jim Sillars threatens pro-union companies with 'day of reckoning' after independence
Scottish independence: Yes campaign feels the heat as Alex Salmond's NHS claims come under furious attack
£23m Birmingham cycle scheme is attacked by Tory councillor for not catering to the elderly
Salmond accused of laughing off national debt with ‘what are they going to do: invade?’ joke
iJobs Money & Business
£280 - £320 per day: Ashdown Group: The Ashdown Group have been engaged by a l...
£400 - £450 Per Day: Clearwater People Solutions Ltd: **URGENT CONTRACT ROLE**...
£35000 - £38000 per annum + Benefits: Ashdown Group: Training Coordinator / Pl...
Data Governance Manager (Solvency II) – Contract – Up to £450 daily rate, 6 month (may go Permanent)
£400 - £450 Per Day: Clearwater People Solutions Ltd: We are currently looking...