UK private sector sees scant growth ahead, CBI says

·1-min read
FILE PHOTO: The Canary Wharf business district is seen at dusk in London

LONDON (Reuters) - British companies expect barely any growth over the next three months, in their gloomiest outlook since February last year, as the cost-of-living squeeze reduces households' disposable income, the Confederation of British Industry said on Wednesday.

The CBI said the expectations element of its surveys of manufacturers, retailers and other services industries fell to +1%, indicating a 1 percentage point difference between the proportion of firms expecting growth rather than contraction.

"It's worrying that expectations for private-sector activity have worsened, but unsurprising given that headwinds continue to intensify," CBI economist Alpesh Paleja said.

A majority of consumer services companies expect sales to fall over the next three months as households rein in unnecessary spending, while manufacturers see growth and retailers and business services firms think output will be flat.

Some economists have warned British economic output might contract over the three months to June, due to headwinds from an extra public holiday to mark Queen Elizabeth's Diamond Jubilee as well as reduced COVID testing and broader headwinds.

Last month the BoE warned the economy would come close to recession by the end of the year, when inflation is set to reach double digits.

Britain's government last week announced a further 15 billion pounds of cost-of-living support to households, on top of 22 billion pounds announced earlier in the year.

The CBI said businesses wanted help too.

"Amid a worsening economic outlook, the government must work with business on a genuine plan for increasing business investment and get growth going again, particularly as costs continue to soar," Paleja said.

The CBI data was based on a survey of 549 firms between April 26 and May 13.

(Reporting by David Milliken, editing by Andy Bruce)

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting