Its latest quarterly survey of almost 1,300 manufacturers showed the sharpest rise in confidence for a decade. However, Sir David Lees, economics committee chairman, said that owed as much to hope as to evidence that recovery would be
Sir David added that the recovery was being led by rising export orders, which could be hit if European economies slid deeper into recession. Exports would also suffer if the pound continued rising.
As the European economies have slowed, exporters have taken comfort from growth in the United States. But the US Budget Director, Leon Panetta, said yesterday that he was 'very nervous,' fearing the Christmas shopping boom and rise in optimism after President Bill Clinton's election was only a 'shadow recovery'.
The CBI struck its cautious note as Britain's other leading business organisation, the Institute of Directors, launched a withering attack at its annual convention on government handling of the economy. 'To the extent that we have a recovery today, it is more or less over the dead bodies of Bank and Treasury officials', said Peter Morgan, its director general.
The CBI survey was greeted enthusiastically in the City, where it was seen as pointing to further growth in the year's second quarter after a new year emergence from recession.
Manufacturers are more confident about stepping up production during the summer than for more than four years, with the CBI forecasting a 0.8 per cent rise in factory output in the second quarter. A sharp rise in new orders is expected in the next four months, although similar hopes in January were dashed. Manufacturers were also able to raise prices for the first time in nearly two years.
Hamish McRae, page 22
Business chiefs' attack, page 27
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