The Confederation of British Industry (CBI) is urging the Government to support the service industry following its latest quarterly service sector survey.
The survey of 377 service companies showed that business confidence in the service sector continued to fall in the three months to February - although this was at a slower pace than the previous quarter.
Cost pressures continued to impact the service sector in February, while profitability declined by 27%. Business profits are set to drop even further in the next quarter (30%).
In terms of employment growth, consumer services stagnated for the second month running, while business and professional services saw their headcounts pick up.
As a result of these findings, the CBI urged Chancellor Jeremy Hunt to address businesses' growing tax burden and offer targeted support in the upcoming March Budget.
Charlotte Dendy, head of economic surveys at the CBI, said that the Government should either introduce full expensing for capital investments or set out a plan to achieve that in the next three years. She continued:
"Profitability is falling, and costs are rising, which is denting many businesses' investment plans and is hitting business confidence across the sector. This underscores the need for serious action to build momentum in the economy at the Spring Budget."
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