CBI calls for cut in interest rates

The
CBI is calling for a cut in interest rates after publishing a report showing
total manufacturing orders falling at the fastest rate for four years.

Its
Quarterly Industrial Trends survey, published today, is particularly worrying
as this latest decline in orders has been driven by a sharp deterioration in
domestic demand.

This
suggests the weakness in global trading conditions that caused the
manufacturing recession is spreading to the home market, where orders are now
falling at the fastest rate since April 1999.

The
survey also shows a decline in manufacturers’ confidence, which can probably be
attributed in part to the war in Iraq – but this is the third consecutive
survey to register a fall.

Total
orders fell faster than expected over the past four months. Thirty-seven per
cent of firms reported a fall, while 16 per cent saw a rise. 

The
difference between the two gives a negative balance of minus 21 per cent,
compared with minus nine per cent in the January survey. Total orders are
expected to continue falling sharply over the coming months.

Digby
Jones, CBI director-general, said: "The end of the Iraq conflict will
steady nerves. But the world’s economic problems were there before the war and
they are still there now. Manufacturers hoped that domestic demand would hold
up until there was a pick-up in global trade, but that does not seem to be
happening.

"This
has been compounded by a slowdown in other parts of the economy, most
worryingly in consumer spending  It
would be wrong to overstate the situation – we are not predicting a recession
at all. But the time has come for another cut in interest rates to see us
through this difficult patch. The prospects for a sustained recovery appear a
long way off and signs of inflation in the wider UK business sector are
rare."

By Ben Willmott

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