By Paul Goodman
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The above figures are in an Institute of Directors (IOD) survey of over a thousand of its members. The Daily Telegraph has a report this morning which understandably links the findings to yesterday's poor borrowing figures (crunch time for George Osborne will come in October, when the Office for Budget Responsibility produces a verdict on how much of the economy’s weakness is structural and whether further spending scalebacks are needed), the elusive prospect of recovery, and demands for infrastructure spending:
"The Institute of Directors (IoD) says that the Chancellor’s growth strategy is
largely “ineffective” and “too little, too slowly”, as demands increase for
radical action in the autumn…
…The Coalition has also been criticised for failing to invest in big
infrastructure projects such as expanding Heathrow or building a new airport
in the South East"…
…Business leaders are now increasingly critical Mr Osborne’s economic strategy,
which is based on cutting public spending while encouraging the private
sector to take on more workers and support the wider economy."
But what is perhaps most useful course to take is simply to list the main findings. See the table on the right, which shows that when asked whether Government policy in key areas has been effective or ineffective, there was a negative finding in every case. The lack of confidence in Ministers' records on tax complexity, employment law and energy infrastucture stand out. Furthermore –
- By a margin of 52% to 19%, growth is expected to be lower than in 2011.
- 65% think there is a low or zero probability of the UK emerging from recession in 2012.
- However, 52% expect growth to be higher than in the first half of the year, compared with 22% who expect it to get even worse.
44% of the business leaders polled report that they had postponed at least one investment or employment decision in 2012 on account of uncertainties in the business or economic environment. Of those who postponed decisions, 76% had delayed decisions on business investment and 65% had held off deciding on employment matters.
And here is the view of Graeme Leach, the IOD's Chief Economist:
“Business is battening down the hatches in the expectation that the recession will continue for the rest of the year. That is bad news for the economy at large, because decisions to invest money or take on more staff are being postponed until things look up. Low confidence leads to delayed decisions, and delayed decisions further undermine economic confidence – it’s a vicious cycle. At the same time, the Government’s reform agenda is pointing in broadly the right direction, but the overwhelming opinion of our members is that they are doing too little, too slowly. If the Coalition wants to break this cycle of low economic confidence, then they need to take some bold steps that will make a real difference to the cost and complexity of doing business in the UK."