Businesses are planning to cut staff and hike prices over the coming months as a persistent slowdown in activity weighs on economic growth, according to a survey
A continued slowdown in private sector activity could hinder economic growth in the coming months, as companies are expected to reduce staffing and increase prices, according to a new survey.
The looming rise in national insurance contributions has forced firms to urgently reassess their budgets, the Confederation of British Industry (CBI) emphasised. Private sector output is anticipated to decline over the next three months, extending a downturn seen in the past quarter.
The CBI, representing everything from large chains to small enterprises, conducted the survey with 990 businesses between December and January. Following the Government’s autumn Budget, business sentiment appeared to wane.
Some respondents pointed out that tax increases led them to revise their financial plans abruptly and seek ways to manage escalating costs. Strategies include increasing prices to transfer extra costs to customers, scaling back on investment projects, and reducing workforce to slash company costs.
Meanwhile, the Government stands by its autumn Budget policies, insisting they are necessary to fill a “black hole” in national finances and to foster growth across various sectors.
TheCBI has warned that private sector staffing is set to decrease in the upcoming months, as companies slow down hiring rates or relocate jobs abroad. This trend underscores a grim sentiment among CBI members about growth prospects within the UK and anticipation of rising selling prices.
Interim Deputy Chief Economist for the CBI, Alpesh Paleja commented: “After a grim lead-up to Christmas, the New Year hasn’t brought any sense of renewal, with businesses still expecting a significant fall in activity.
“Alongside plans to cut staff and raise prices further, this risks an increasingly awkward trade-off for policymakers. Anecdotes suggest that companies are being hit by lacklustre demand and caution among consumers, while also continuing to adjust to measures announced in the Budget.
“There is an urgent need to get momentum back into the economy. The Government can help shift the UK’s economic narrative with more determined focus on measures that could drive growth.”