A regional survey of UK economic trends carried out on behalf of the Confederation of British Industry and all of the Regional Development Agencies reports that businesses are less optimistic than they were six months ago. The twice yearly survey found that despite net increases in orders, output employment and prices, companies have suffered from a fall in profit margins, which they do not expect to increase over the next year.

Doug Godden, CBI head of economic analysis, said “Increases in orders and output have not done anything to make businesses happier than they were earlier in the year. In fact the gloom has deepened because rising costs for things such as oil have combined with fiercely competitive conditions to squeeze profitability.”

The balance of companies expecting the overall business situation to improve against those expecting it to worsen fell from 29 per cent in April to just 14 per cent. While this shows that businesses are, on the whole, still positive about the future, they are significantly less optimistic than they were six months ago. Business is the South West and West Midlands showed the highest levels of optimism whilst those in the East and East Midlands showed the lowest.

According to the survey employment has increased over the past year with a balance of 21 per cent of businesses reporting higher recruitment, although expectations for the next 12 months are lower with the balance of 17 per cent of companies predicting a rise in employment numbers.

The full report can be downloaded from the business surveys section of the CBI website at: www.cbi.org.uk

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