On the eve of its annual conference, a bleak survey from the CBI reveals that 70 per cent of the UK’s captains of industry say their confidence has been badly damaged by the European financial and political turmoil that has been raging since August.
John Cridland, the CBI’s director‑general, said: “The risk it [the sovereign debt crisis] poses to the UK and world economy is getting ever greater.”
He warned that events in Europe and faltering UK economic growth meant the country was “at a critical tipping point”, and called for Chancellor George Osborne to use his autumn statement next week to produce a “more creative growth strategy”.
Cridland said: “The survey shows that business confidence has been hit by the Eurozone crisis and fears of a secondary banking crisis in 2012, so firms are revising their investment and employment plans.”
The CBI research, carried out by Ipsos Mori between 6 October and 4 November, questioned 122 business leaders from the FTSE index of Britain’s 350 biggest quoted companies, and privately and foreign owned firms of the same size operating in the UK.
A third said they were now reconsidering investment plans. A total of 38 per cent said they were either planning additional job cuts or putting hiring on hold in the uncertain climate. One silver lining was that only 30 per cent of business leaders believed prospects for their companies had deteriorated.
“For me that rams home the point that businesses are being cautious because of political risk,” Cridland said.
The director‑general added that his members were “absolutely concerned” that the Eurozone rescue package had already begun to unravel. But he added that most believed if the crisis was effectively handled, the UK could get back on track for what would still be a “slow and fragile” recovery.
The coalition government will be relieved that today’s survey reveals that 82 per cent of business leaders remain firmly behind its deficit reduction programme, claiming it is vital to ensure Britain’s economy “remains credible” with troubled financial markets.
However, Cridland said Osborne could embark on a “Plan A-plus” by freeing up the flow of credit to the economy through infrastructure investment.He also called on the Chancellor to “clarify all aspects of energy policy”.