CBI urges fresh interest rate cut as economic slowdown spreads

Employers’
body the CBI is calling for another cut in interest rates as the slowdown faced
by UK manufacturers spreads to the service sector.

Profitability
and optimism have both fallen at the fastest rate since November 1998,
according to a survey by the CBI and consultancy Deloitte & Touche.

"Clearly,
the economic slowdown facing the UK is now spreading beyond the internationally
exposed sectors typified by UK manufacuring. We are seeing weakness in some
consumer-related service sectors and an intensifying squeeze on business and
professional services companies," director-general of the CBI Digby Jones
said.

"With
inflation also firmly under control, previous interest rate cuts are vindicated
and another cut is necessary to help insulate all sectors of UK business from
the persisting global slowdown. The Bank of England should cut sooner rather
than later."

Roger
Bootle, economic adviser at Deloitte & Touche, said "This survey shows
a very sharp fall in confidence in the service sector which powerfully supports
the view of those who say the UK economy is slowing sharply. It affirms what we
know from other sources. The consumer may still be active but business is
becoming alarmed about economic prospects."

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There
were 225 responses to the survey of consumer, business and professional
services.

By
Katie Hawkins