PracticeConsultingUK has ‘two speed’ economy, says CBI

UK has 'two speed' economy, says CBI

Further evidence of a two-speed economy was revealed in a CBI databank survey released today.

According to the Confederation of British Industry, rises in service sector pay outstretched manufacturing in the second quarter of 2001.

From May to July manufacturing pay grew by 2.9% while service sector pay awards, which rose by 3.9% in the first quarter of the year, climbed 4.6% in the second quarter.

Sudhir Junankar, associate director of economic analysis at the CBI, said this was clearly ‘a tale of a two speed economy’.

He added: ‘Manufacturing settlements are relatively low and reflect major downward pressure on prices, coupled with the impact of the global slowdown.

‘Coming on top of recent official figures which showed inflation under control, we remain confident our data do not put the government’s inflation target at risk.’

But Andrew Smith of KPMG refuted CBI claims that the sharp rises in the service sector were largely influenced by a number of high awards in May among small professional services firms.

He stressed that while it had been clear for sometime that a two speed economy existed, and that this would affect manufacturing settlements, there were ‘still pressures on the service sector as well’.

According to figures from the Office of National Statistics, the UK’s manufacturing industry has shown negative growth figures for the second quarter running, putting the sector ‘theoretically’ in recession.

Links

CBI forecasts recovery for 2002

Manufacturing falls signal economic gloom

CBI online

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