3 September 2001, 10:16  UK service sector starts to feel impact from slowdown in manufacturing - CBI

LONDON (AFX-UK) - The UK service sector is starting to feel the impact from the slowdown in the manufacturing sector, according to the latest joint survey from the Confederation of British Industry and Deloitte and Touche. The survey found that profitability and optimism fell at the fastest pace since November 1998. Digby Jones, CBI's Director-General, said it is now clear that the economic slowdown facing the UK has spread beyond internationally exposed sectors. "We are seeing weakness in consumer-related service sectors and in intensifying squeeze on business and professional services companies," he said. He called on the Bank of England to cut rates but added that lower rates alone is not the solution. "The government must show it understands the serious threat to job creation. From the Climate Change Levy to restrictive employment legislation, this is no time to add further burdens to business," he said. Economic adviser to Deloitte and Touche, Roger Bootle, said the survey supports the view that the UK economy is slowing sharply. "The deterioration in sentiment in business and professional services is particularly marked. It affirms what we know from other sources. The consumer may still be active but business is becoming alarmed about economic prospects. If the MPC needed evidence to cut rates further, this survey provides it," Bootle said.

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