Spring gives way to winter gloom

Businesses are increasingly gloomy about their prospects as slowing economic growth and rising costs - which they are not passing on to customers - hit their profit margins.

A new survey by the CBI and the Regional Development Agencies, taking in all sectors of the economy, reveals today that employers are less optimistic about the general business situation than they were in the Spring.

Orders, output and jobs have all increased over the last year but at a much slower pace than in the year to Spring. The rate of the slowdown has also been greater than expected.

Looking ahead, the biggest inhibitor to growth is seen as red tape and regulation, according to the Autumn Regional Survey of UK Economic Trends.

So far, higher energy costs have been absorbed by employers, with only 12 per cent passing on the increases in full to their customers. However, 44 per cent will begin to do so if energy prices remain high, the survey reveals. And in a bid to reduce the impact of the higher costs, 48 per cent would also seek greater energy efficiences and 37 per cent would change their energy purchasing arrangements.