Business growth expectations fall to weakest since 2022
Growth expectations among private sector firms continue to decline rapidly, fresh figures suggest, with forecasts reaching their lowest since September 2022.
According to the CBI’s recent Growth Indicator survey, 30 per cent more private sector firms are expecting activity to fall than to grow over the next three months.
“There is little sign of summer cheer in our surveys,” said Alpesh Paleja, deputy chief economist at the CBI. “Our surveys were already pointing to weaker momentum than official data at the start of this year, and this sluggishness looks to have continued since.”
Businesses now expect growth to slow more sharply than over the last three months in every sector except manufacturing.
Volumes in the services sector are expected to decline significantly, with a 32 per cent net negative sentiment pushing expectations at their weakest since November 2022.
The anticipated fall is driven by predictions of decline in business and professional services (-29 per cent), and especially in consumer services (-43 per cent) volumes.
Distribution sales are also expected to fall in the three months to August, with a -39 per cent net negative sentiment, the worst since September 2022, while manufacturing output has 14 per cent net negative sentiment, though this was slightly better than the previous three months.
Firms pin hopes on industrial strategy
The news comes as Chancellor Rachel Reeves is preparing to deliver her first spending review next week, which sets the budgets for government departments until 2029.
“With the Spending Review and Industrial Strategy less than two weeks away, the government has a critical opportunity to drive innovation, investment and sustainable economic growth,” added Paleja.
The economist made a variety of suggestions on how the government could kickstart the move, such as through expanding the Made Smarter Programme, delivering a National Tech Adoption Plan, reforming business rates, delivering flexibility around the Apprenticeship Levy and increasing incentives for occupational health.