We accept that there is little the government can directly do about. We hope that interest rates have now peaked and that ministers do more to ease pressure on profit margins by reducing the rising burden of red tape. The survey suggests a squeeze on profit margins, caused by falling prices and rising costs. Domestic prices fell faster than expected over the past four months and firms anticipate a further fall over the next four months. Average unit costs rose over the past four months for the first time in nearly two years.
Companies expect unit costs to be broadly stable over the next four months.
Firms had forecast a slowdown in job losses for the past four months, but this did not happen. They expect employment to fall at a slower rate over the next four months. The balance of minus 13 compares with minus 14 in January and minus 13 in October. Medium firms said for the first time since last July that they plan to cut investment in plant and machinery over the next year. Small firms continue to scale back investment intentions.