The squeeze on household incomes saw the UK's consumer services sector deteriorate in the last quarter at its fastest rate since 2009, as the service sector of the economy continued to weaken, the Confederation of British Industry said.
The business and professional services sector slowed at a lesser rate than expected, but suffered “a sharp drop in confidence”, according to Ian McCafferty, the CBI’s chief economic adviser. He blamed “developments in the eurozone and heightened uncertainty over global prospects”.
The quarterly survey, conducted between October 28 and November 16, covers 189 companies from law firms and accountants to hoteliers and leisure groups. In consumer services, a negative balance of 41% of firms saw volume fall, against expectations of only -1% and the fastest since May 2009, while value fell at the fastest pace since February 2009, with the -49% balance disappointing expectations of +7%.
Firms said the level of activity was well below normal in both measures, and optimism about the general business situation was lower than three months ago at a -23% balance. Both volume and value of business are expected to decline further, though at slower rates, in the current quarter.
The number of people employed also fell, though slower than expected. But employment is expected to fall more strongly next quarter. In business and professional services, business volume and value fell less strongly than in the three months to August, with balances of -6% and -12% respectively (previously -22% for both). But firms said they regarded the volume and value of business as well below normal and they were less optimistic about the general business situation than they were three months ago.
Mr McCafferty said: “Business conditions are worsening ... this is yet more evidence of people with squeezed household incomes being forced to cut back on their discretionary spending.”
Meanwhile, the British Chambers of Commerce has cut its forecasts for UK economic growth. It now says growth will be “minimal” until mid-2012 and reach 0.8% in total – down from its previous estimate of 2.1%. It has cut its 2013 forecast from 2.5% to 1.8%.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article