42,000 UK job losses expected, study claims

Manufacturers’ confidence has fallen in each of the UK’s eleven regions for the first time in a year, according to the latest Regional Trends Survey, published today by the CBI and Experian Business Strategies. The sharpest declines in sentiment were recorded in the East of England, the Midlands, the North West and Scotland. The smallest […]

Manufacturers’ confidence has fallen in each of the UK’s eleven regions for the first time in a year, according to the latest Regional Trends Survey, published today by the CBI and Experian Business Strategies.

The sharpest declines in sentiment were recorded in the East of England, the Midlands, the North West and Scotland. The smallest declines were reported in the North East and Northern Ireland.

The survey also shows a marked fall in export optimism for the next 12 months in most regions, with the East Midlands, the North West and Scotland the worst affected. But positive results were recorded in the North East and Yorkshire & the Humber.

The recent CBI Quarterly Industrial Trends survey showed the number of firms working below capacity rising to 74%, a 20 year high.

This Regional Trends Survey reveals that Yorkshire & the Humber had the highest percentage of firms working below capacity – 79% – while Northern Ireland had the lowest – 51%.

Despite the prevailing gloom, there are widespread expectations that output will pick up over the next four months, fuelled by improvements in total orders. The North East is the most optimistic of seven regions that expect output growth. Four regions, led by Scotland and Wales, expect output to decline.

Peter Gutmann, Associate Director of Experian Business Strategies, said: ‘The gloomy tone in this survey is consistent with the tough time manufacturers are facing in export markets. Global demand is still weak and there are clear downside risks to the sluggish upturn expected this year. The positive responses from a few regions on some key forward looking indicators are therefore encouraging. Moreover, the pound’s depreciation against the Euro in recent weeks could provide a little relief for hard-pressed manufacturers in the months ahead.’

With profit margins under pressure, no regions plan to increase investment in plant and machinery. The most negative investment intentions were recorded in the South East and London, Northern Ireland, Wales and the South West.

Firms expect employment to contract in all but one region. The largest decline is expected in the West Midlands, followed closely by the South East and London, the North West and Wales. For the second consecutive survey, employment is expected to increase in Northern Ireland. Overall, the CBI and Experian Business Strategies predict 42,000 UK job losses in the first quarter of 2003.

Doug Godden, CBI Head of Economic Analysis, said: ‘With further job losses on the horizon, manufacturing confidence has deteriorated right across the UK. This had not happened for a year, despite the manufacturing recession. Weak international demand is pulling operating levels further away from full capacity. In this difficult climate, firms have no intention of increasing investment, but it is encouraging that many regions expect output to pick up.’

Note: The results of the CBI/Experian Business Strategies Regional Trends were taken from 904 replies to the CBI’s Quarterly Industrial Trends Survey received between 12 December 2002 and 8 January 2003.

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