Businesses are planing to axe staff and hike prices in order to weather an anticipated slowdown across the economy.
According to the Confederation of British Industry (CBI), private sector bosses were forecasting a “significant slowdown” in activity over the coming three months.
Declines were anticipated across all main sectors, the CBI said, as firms reduced headcounts, moved roles overseas and slashed investment in response to tax hikes.
Activity had fallen over the last three months, with the CBI’s survey of 990 companies finding service sector volumes were seen falling by 20% ahead, as manufacturing output fell 19%.
“After a grim lead-up to Christmas, the New Year hasn’t brought any sense of renewal,” CBI economist Alpesh Paleja commented.
“Anecdotes suggest that companies are being hit by lacklustre demand and caution among consumers, while also continuing to adjust to measures announced in the Budget.”
Companies have repeatedly warned of surging costs in response to the likes of chancellor Rachel Reeves’ employer national insurance hike, laid out in October’s Budget.
“There is an urgent need to get momentum back into the economy,” Paleja added.
“The government can help shift the UK’s economic narrative with more determined focus on measures that could drive growth.”