Slowdown on company profits

A GROWING squeeze on company profits will be highlighted this week, with figures expected to show a further fall in the rate of return for investors in British industry.

Employees are taking a bigger slice of the cake, helped by a still-buoyant labour market and a reluctance by firms to shed workers in case the economy picks up. Meanwhile, the slowdown is making it harder for companies to raise prices.

In the 12 months to the second quarter of 2000, the rate of return on capital was 13.2%. It continued falling and by the second quarter of 2001 was 12%. Figures for the third quarter, which are due out on Thursday, seem unlikely to show any improvement.

Richard Jeffrey, an economist at ING Barings, said: 'The overall deterioration in profitability is likely to continue for the foreseeable future.'