Britain’s economy ‘on downhill slope’

Press, 1 November 1979, Page 6

Britain’s economy ‘on downhill slope’

NZPA-Reuter London; j Britain has entered an (economic recession, accord-, ling to a sombre report that: shows business confidence has slumped dramatically in: (the last three months. ! The report by the Con-, (federation of British In-1 (dustry, the country’s main) .organisation of employers, (asserts that the economy is; (heading for its biggest; (downturn since 1974-75. Replies from 1804 com- 1 Ipanies surveyed by the C. 8.1. show that demand and (output are weak, more firms' )are working below capacity, [investment plans are being : (shelved, export prospects are in decline, export prices: are too high, export orders, poor, and companies’ cash positions have deteriorated; sharply. Signs of recession had been expected to show up in) statistics since the recent,' slowdown in the American' [economy and because of: ‘tight anti-inflation policies'

throughout the industrial (West. The recent strength of the pound on foreign-exchange [markets has made British, (exports more expensive for: (foreigners to buy, and this; has hit order books. The pound fell sharply on (European markets yesterday, 'but this was said by dealers I to be caused more by con-, jeern about high wage demands in Britain. The C. 8.1. survey says) firms are laying off workers and expect to continue to do iso, and that there has beenno easing in production costs. A small-scale recovery , from last winter’s industrial jdisruption — when strikes [and slowdowns hit the econ(omy and helped the Con- ! servatives to oust Labour in Ithe (Northern) spring election — has petered out, the survey says. Forty-seven per cent of •firms canvassed said they 'were less optimistic than 1

three months ago: onlv iseven per cent were more optimistic. Most firms canvassed exIpect the volume of new i orders to stagnate or decline j'n the next four months, and report that this has already been happening since July. Seventy per cent of firms questioned report that their order books provide fewer than four months work, j Sixty-one per cent rtf firms report that they are working below capacity, and 74 per cent of firms mention a shortage of orders as the main cause of depressed output. The C. 8.1. expects manufacturing investment to fall by as much as five per cent next year. Thirty-five per cent of firms say they have cut back on jobs in the last four months, and 37 per cent say they expect further cuts in the months ahead. Fifty per : cent report their cash position has deteriorated in the last year.