Government ‘ineffective’ in cutting red tape and tax

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BUSINESS leaders have branded the coalition government’s attempts to cut red tape and lower taxes as “ineffective” and warned that the recession will drag on into the second half of the year.

A poll of 1,200 members of the Institute of Directors (IoD) found nearly 70 per cent think Westminster has failed to reduce business regulation, while a similar percentage felt the tax system has not become simpler.

Just 7 per cent believe the UK will be able to pull itself out of recession by the end of the year, according to today’s survey.

A lack of confidence in the economy has caused 44 per cent of members to delay investment or taking on further staff.

Graeme Leach, the IoD’s chief economist, warned: “If the coalition wants to break this cycle of low economic confidence then it needs to take some bold steps that will make a real difference to the cost and complexity of doing business in the UK.”

David Watt, executive director of the IoD in Scotland, added: “We have the same view of the economic picture.

“The Scottish Government should be taking the same type of actions our members are advocating at UK level. They may claim not to have all the levers in their control but the ones that they do have they should be pulling pretty hard.”

News of the low levels of business confidence coincides with a survey by the CBI warning that manufacturers expect output to be “flat” over the next three months, having previously predicted growth.

The warning follows a drop in domestic and export orders over the past month.

Anna Leach, the CBI’s head of economic analysis, said: “The economic environment for UK manufacturers remains challenging, with domestic demand relatively muted and the ongoing eurozone crisis now seeming to drag on broader global economic momentum.”