Private Sector Firms Brace for a Downturn – Expectations Drop to Tragically Low Levels
In the latest CBI Growth Indicator, private companies are already sounding the alarm bells: activity in the three months to August is forecast to shrink with a weighted balance of -30%. That’s a drop that makes the CFOs in the backrooms look out of their minds.
Worse Than Even a Rainy Day in September 2022
- Business volumes in the services sector are expected to tumble by -32% – the weakest since November 2022. A full‑blown service industry slide.
- Even distribution sales and manufacturing output are on a downward slide, both dipping by -39% and -14%, respectively. Look at those numbers – it’s not just the consumer’s taste that’s changed.
- Behind the scenes, the slump is driven by a sharp fall in business & professional services (-29%) and a yet sharper drop in consumer services (-43%). The money flow has turned into a very hush‑hush affair.
Historical Context – The Long Dark
Back in the three months to May, activity slipped to -26%, a step down from -19% in April. The downturn was felt across every sector, like a bad corporate joke that slips every time you’d think it’s finished.
What Private Firms Are Saying
Alpesh Paleja, Deputy Chief Economist at the CBI, sums it up with a shrug: “There’s no sign of summer cheer in our surveys – the private sector momentum is weak, and the lag from official data is already gloomy. This sluggishness seems set to continue.”
He adds the long list of headwinds:
- Higher employer NICs and the National Living Wage hike are pushing costs higher.
- Global trade uncertainties are throwing a wrench into the gears.
- A general sense of weak domestic demand keeps investors on the sidelines.
Calling for Government Action (and Not Just a Coffee Break)
Given this bleak backdrop, firms are turning to the government for a “big‑wig” plan to recapture business confidence. With the Spending Review and Industrial Strategy looming in less than two weeks, there’s a real shot for Politicians to sprout:
- Expand the Made Smarter Programme – because everyone needs a little smarter hardware.
- Roll out a National Tech Adoption Plan – the nations that adopt tech first are the ones that win.
- Reform business rates – less draconian, more sensible.
- Flexibilise the Apprenticeship Levy and boost incentives for occupational health – finally put some love into labor.
Time is ticking, and the bottom line is simple: for the private sector to feel a slice of optimism, the government’s next move should be bold, innovative, and leave business leaders chuckling at their revitalised profits.
