A survey of more than 1,200 business leaders conducted by the Institute of Directors (IoD) has found “serious concerns” that the recession will last throughout 2012 with only a modest recovery next year. Business leaders have warned that the Government must cut taxes, reduce red tape and invest in new infrastructure to boost growth and the survey highlighted that 44% of top business executives had postponed at least one investment or employment decision this year due to the uncertain environment. More than half of those said the decisions would be delayed until at least 2013.
Graeme Leach, Chief Economist at the IoD, said:
“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.
“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.”
The IoD survey found that 54% of business leaders thought that Government attempts to reduce taxation had been “ineffective”, whilst 68% were similarly critical over attempts to reduce business regulation and 62% were dismissive of attempts to simplify employment law.
John Redwood, the former Cabinet Minister, said:
“Tax revenues from self-assessment income tax and capital gains tax are falling because the Government has set uncompetitive rates.
“The Chancellor wisely changed his tax regime for oil and gas in the latest budget, following the fall-off in activity last year from higher taxes. He needs to review all taxes with a view of maximising revenues by setting competitive rates.”
In a statement, a Government spokesman said:
“We have set out a comprehensive strategy to achieve strong, sustainable and balanced growth, including important reforms to reduce the burden of regulation.
“Since 2011, savings to business from cuts in regulation have outweighed the costs of new domestic regulation by more than £850m, and a root and branch reform of labour laws has already led to an increase in the qualification period for unfair dismissal and reform of Employment Tribunals.”