Interview: CBI chief John Cridland

JOHN Cridland, director-general of the Confederation of British Industry, Britain’s leading employers lobby group, is unapologetic. Amid the chronic economic headwinds, the CBI has sharply cut its growth forecasts last week for this year and 2013.

Such reining in of economic recovery optimism has become a recurrent theme at the bosses’ organisation – and many other economic forecasting units – in our prolonged four-year downturn.

But Cridland insists it does not suggest rose-tinted glasses at the CBI previously, even though he told one business audience as recently as the spring that there were plenty of reasons for optimism just before Britain entered double-dip recession.

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The body now forecasts a contraction in domestic product (GDP) in 2012 of 0.3 per cent, down from its forecast in May for growth of 0.6 per cent. As the UK government’s austerity programme continues to bite, the CBI also cut its growth forecast growth next year to 1.2 per cent from a previous 2 per cent.

In his office at CBI’s HQ, in London’s Centre Point tower, he says it is important for the organisation neither to be silver-lining addicts or Jeremiahs.

“I have to be careful I don’t talk things up,” Cridland says. “But it’s important that the man or woman on the Glasgow omnibus has some sense that there’s light at the end of the tunnel.

“Somewhere in Glasgow there’s a business that has found a way to serve the growing affluent middle classes around the world.”

Cridland says seven out of ten CBI member firms tell him that, despite the tough UK economic backcloth, they are doing well through a mixture of innovation, exports to emerging markets and more realistic expectations of workforces that are “far more concerned about job security than improvement of living standards in the short term”.

Cridland, who is the keynote speaker at the CBI Scotland annual dinner in Glasgow on Thursday, sees ten or 20 member firms a week. He says the most positive are the exporters that have cracked selling to burgeoning middle class markets in the likes of Brazil, China, India, Mexico and Indonesia.

He recently said he believed the broader UK economy was flat rather than still declining after its second recession struck in four years.

But he acknowledges that, for the average person, a “flat” economy is virtually indistinguishable from one edging backwards. “For those close to the breadline there’s real pain,” Cridland says. “It’s leading to hard choices for them as to what to put into the supermarket basket and what to leave out.”

The CBI chief says its members still overwhelmingly support Chancellor George Osborne’s public deficit reduction plans. But Cridland says the slow pace of implementing infrastructure projects – from construction to housebuilding and green energy – to try and get the economy moving again is “frustrating” and means Plan A-plus remains an aspiration, not an achievement.

“Plan A remains the right plan,” he adds. “But we are not there on delivery. I’m not saying this stuff is easy.

“Things that used to be paid for by the taxpayer will have to be paid for in the future via complex deals. That can involve sovereign wealth funds, pension funds, etc. We are asking civil servants to put together projects that would more usually be the City’s domain.

“But there’s not the momentum. The UK government will only get an A-plus from me when there’s delivery on the ground.”

Having said that, it is clear – even without the CBI’s recognised political cat-footedness – that the CBI boss is not joining the push in some quarters for Osborne to be heaved overboard by admiral David Cameron.

Critics of undiluted austerity recently seized with glee on the fact that half the economists who publicly backed austerity two years ago now say growth measures are also needed or we might risk going off a cliff.

But Cridland simply says the austerity programme remains deeply necessary, partly to protect Britain’s good credit ratings in financial markets, while acknowledging “it does not surprise me when things get tough that things that were previously accepted come into question”.

Cridland says the embattled Chancellor remains open-minded to ideas and cites his cutting of corporation tax to 24 per cent in April, and a commitment to bringing it down to 22 per cent by 2014.

Ah, 2014… the year of the referendum on Scottish independence. As Scotland on Sunday revealed yesterday, Cridland will tell Thursday’s CBI Scotland annual dinner in Glasgow that the trade body cannot remain silent on the possible economic disadvantages of Scotland taking the high road away from the rest of the UK.

“The economic case for independence has not been made,” Cridland says. “If you get a progressive fragmentation of tax rates and regulatory standards you weaken the single market.

“CBI members in Scotland by a large majority see the benefit in maintaining the single market in the UK. It is a strength for business north and south of the Border.”

Aware of the acute political sensitivities of the issue, with First Minister Alex Salmond hardly likely to welcome the intervention, the CBI chief stresses more than once that the bosses’ organisation has no mandate on constitutional matters and that the final decision is rightly with Scottish voters.

But he asserts that the CBI would be abnegating its responsibilities if it did not point out what it sees as the possible adverse economic consequences of a split of the union.

“We should not take views on constitutional matters. But we are entitled to express a view on the economic implications of political matters.”

Moving on to education for tomorrow’s workers, Cridland steps into the minefield of this year’s toughening up of A-level marking for students in England, Northern Ireland and Wales that led to the first fall in a generation of top pass rates.

There has been a barrage of criticism from parents and teachers for the new rigour being implemented halfway through the courses.

But, while Cridland says he has very sympathetic on the timing issue, he is glad that “a line has been drawn in the sand. We cannot kid ourselves that every year’s better exam results mean standards are rising. We were fooling ourselves before”.

He is also forthright on the issue of excessive boardroom remuneration tarnishing the reputation of business, and said he welcomed the “shareholder spring” revolts against a flurry of executive pay deals. He says: “It’s been hugely damaging to business. Most companies only pay themselves what they can afford and what the shareholders will accept. We are not in the business of defending the indefensible.”