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Sunday, 4 November, 2001, 18:26 GMT
Banks join factories on 'danger' list
CBI Conference 2001 graphic
By BBC News Online's Mike Verdin at the CBI Conference

Banks, building societies and life insurers have joined manufacturers on the list of UK firms most threatened by the economic downturn, the Confederation of British Industry has said.

Financial services firms are, with factories, most likely to suffer a trade downturn in coming months, the CBI's chief ecomic adviser, Ian McCafferty, said.

The warning follows a series of lay-offs at, particularly US, investment banks, suffering their worst recession since the mid-1970s.

Two weeks ago, Merrill Lynch invited most of its 65,000 staff to apply for voluntary redundancy in a drive to cut numbers by one sixth.

Survey findings

The CBI's finding followed a survey of 249 top UK executives into the affects of the 11 September attacks on UK business.

Almost two thirds of those surveyed thought the attacks had affected trade, with more than one quarter reporting a "significant" number of cancelled orders.

Almost 40% thought that the affects of the strikes would last for two years.

"September 11 was a body blow to business, which will deepen and lengthen the global slowdown," CBI director general Digby Jones told reporters ahead of the confederation's 25th annual conference.

"Manufacturers of industrial goods, and exporters of everything, have been particularly badly hit."

Costs cut

While services firms were going relatively unscathed, those which were feeling the affects of the slowdown were suffering noticeably, Ian McCafferty said.

Investment plans are the "main casualties" of declining trade, he added.

More than one quarter of executives surveyed blamed the attacks for decisions to implement cost cuts, on areas including staffing.

But Mr Jones said the UK was nonetheless likely to escape recession.

"Firms are bracing themselves for a rough ride, but our economy is resilient," he said.

See also:

04 Nov 01 | Business
CBI seeks to restore credibility
03 Oct 01 | Business
Consignia cuts 1bn to stem 'crisis'
30 Aug 01 | Business
Claims Direct sale provokes outrage
26 Apr 01 | Business
Vallance resigns from BT
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