Optimism is low amongst British companies who now expect barely any growth over the summer months, in what is their gloomiest outlook since February last year, as the cost-of-living squeeze reduces households’ disposable income, the Confederation of British Industry (CBI) said today.
The CBI survey made grim reading. Its members reported almost no difference between those who expect some growth and those who expect nothing or worse.
“It’s worrying that expectations for private-sector activity have worsened, but unsurprising given that headwinds continue to intensify,” CBI economist Alpesh Paleja said.
The reality is that a majority of consumer services companies expect sales to fall over the summer months as households rein in unnecessary spending. In the meantime, manufacturers see growth and retailers and business services firms think their output will be flat.
Some economists have now warned that British economic output may well contract over the three months to June. This is due to headwinds from an extra public holiday to mark Queen Elizabeth’s Diamond Jubilee as well as things like COVID reduced testing.
Last month the BoE warned the economy would come close to a recession by the end of the year when inflation is set to reach double digits. However, more analysts are expecting a recession, with some forecasting a prolonged period of economic strain leading to stagflation.
The CBI data was based on a survey of 549 firms between April 26 and May 13.