Private Sector Not Looking Forward To A Happy Start To The Year

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Private sector firms expect activity to fall in the three months to March according to the CBI’s latest Growth Indicator. Expectations are now at their weakest in over two years. This pessimism was shared across all sub-sectors with manufacturers the most pessimistic – anticipating output to fall -31%. Expectations are at their weakest since May 2020.

The disappointing outlook comes as private sector activity fell again in the three months to December, at a faster pace than in the three months to November (-21% from -13% in November). Activity has been flat or falling since August 2022. 

Budget blast

Alpesh Paleja, the CBI’s interim deputy chief economist, says: “There is little cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring and price growth expectations are getting firmer. Businesses continue to cite the impact of measures announced in the Budget, particularly the rise in employer NICs, exacerbating an already tepid demand environment. “As we head into 2025, firms are looking to the government to boost confidence and to give them a reason to invest, whether that’s long overdue moves to reform the apprenticeship levy, supporting the health of the workforce through increased occupational health incentives or a reform of business rates. “In the longer term, businesses will be looking to the industrial strategy to provide the stability and certainty which can unlock innovation and investment and provide that much needed growth for the economy which can deliver prosperity for firms and households alike.” 

Picture: Chancellor Rachel Reeves’ first Budget has dented business confidence.

Article written by Cathryn Ellis
09th January 2025

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