Firms hit by sharp slowdown in activity as confidence weakens, CBI finds

"The CBI's latest growth indicator for the private sector showed a weighted balance of -34 per cent, indicating that a significant majority of firms reported falling activity over the past three months. Companies surveyed said they expected the sluggish conditions to persist into the early spring, underscoring continued fragility across the economy. Economists said the downturn was partly driven by cautious consumers, who reined in spending amid weeks of intense speculation ahead of November's Budget. Despite that uncertainty now easing, businesses report little evidence of a rebound."

"Alpesh Paleja, deputy chief economist at the CBI, said the figures capped a disappointing year for private sector growth. "They mark a continuation of the headwinds that have plagued businesses over the past 12 months: tepid demand conditions, with households cautious around spending, and strong cost pressures squeezing margins," he said. Paleja added that pre-Budget uncertainty had delayed investment decisions and major projects, leaving pipelines of work constrained. "The latest growth indicator suggests that the alleviation of this uncertainty hasn't materially boosted activity," he said."

A CBI survey shows private-sector activity contracted sharply, with a weighted balance of -34% and most firms reporting falling activity over the past three months. Firms expect sluggish trading conditions to persist into early spring, reflecting broader economic fragility. Economists attribute part of the downturn to cautious consumers who pulled back spending amid intense pre-Budget speculation, and to sustained cost pressures squeezing margins. Pre-Budget uncertainty delayed investment decisions and constrained project pipelines, limiting any rebound. ONS data showed a 0.1% GDP contraction in October and retail sales volumes fell in November. Services hiring intentions have dropped to their weakest level since July 2020, and analysts link recruitment slowdown to higher employment costs.

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