CBI fears ‘crunch will get worse’


The latest Financial Services Survey from the Confederation of British Industry (CBI) and PricewaterhouseCoopers LLP has revealed they fear the credit crunch will worsen.

It found that business volumes have continued to fall, while numbers unemployed and profitability fell at their fastest rate for five years.

Ian McCafferty, CBI chief economic adviser, said: "It is clear that the credit crunch has worsened over the first three months of this year.

"We can expect further tough times in the financial sector, and as this feeds through into the wider economy it will inevitably be felt through slower economic growth this year and next."

Fund managers were the only people to say they were more optimistic since December.

However, they expect to see values weaken in the coming months because of lower volumes and continued pressure on incomes.

The poll revealed four in ten firms predicted business growth will be limited by their difficulty to raise funds.

Mr McCafferty noted that interest rate cuts would help, although "credit markets are unlikely to return to anything like normality for some time to come".