Business backing for Brown plummets

Published on Thursday 8 January 2009 20:59

BUSINESS confidence in Gordon Brown's handling of the economy has crumbled over the past few months, according to a poll released last night.

The survey of 200 leading business figures found just 28 per cent were confident in Mr Brown's ability, compared with 42 per cent in a similar poll last October, while confidence in the Chancellor, Alistair Darling, fell from 25 per cent to 16 per cent.

The results of the ComRes survey came as Lord Jones, a former business minister and head of the CBI, warned the government's VAT cut "was never going to work", while the Labour MP Frank Field branded the move "fatuous" and "pointless" in his internet blog.

But during a tour of Liverpool, where the Cabinet convened yesterday, Mr Brown made it clear he would press ahead with other measures to revive the economy.

The Prime Minister said he would look at further steps to encourage lending.

"We know now how important banks are to the system, but if they can't supply finance, and if they don't keep the money moving in the economy, and if they are not able to fund new business loans or fund mortgages, then we have lost an important function that is vital to every part of the country," he said.

Although economists warned that banks were unlikely to pass on interest rate cuts because of their precarious balance sheets, Mr Darling said lenders had to respond to yesterday's move.

"We need to make sure that lending is passed on and the availability of credit is available for businesses," he said.

George Osborne, the shadow chancellor, said the rate cut was necessary, but it would not help savers.

Vince Cable, the Lib Dems' economy spokesman, said the cut was only half the solution. "For many borrowers, the problem is not the price of credit but its availability," he said.