Blair is bad news for City, say directors

Poll shows gloom on pound and interest rates
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Westminster Correspondent

Tony Blair has failed so far to get his message across to the City and big business that new Labour can be trusted to improve the economy, or hold down interest rates and income tax, according to a survey of company executives.

The poll of business opinion, which will come as a blow to Labour's hopes of winning over the business community, indicates that while 72.3 per cent of company chiefs think Labour will win the next election, they believe a Blair government will be bad for corporate Britain.

Asked by the leading City research organisation, Hemmington-Scott, how they thought the economy would fare, more than 80 per cent believed interest rates would rise in the long-term, 78.1 per cent said the pound would fall immediately and 71 per cent said it would remain depressed.

The survey, based on responses by more than 600 directors of companies quoted on the Stock Market, follows an intense campaign by Labour to secure support from big business. Mr Blair has recently addressed the CBI annual conference and toured the country talking to business leaders, while the Shadow Chancellor, Gordon Brown, and his team, have been invited into boardrooms to preach the new Labour message.

But the survey suggests directors believe there has not been much change from old Labour. The poll underlines fears in the Labour leadership that they have a long way to go in persuading many strands of the electorate that the party's economic strategy has changed.

Labour's opinion poll rating has been consistently 25 per cent ahead of the Tories in recent months. However, those who replied to the business survey were more sceptical.

More than 70 per cent think overseas companies will be less likely to set up shop in a Britain run by Mr Blair. The City of London's position as Europe's financial centre would be diminished under a Labour government, say more than 50 per cent of those who responded.

Hemmington-Scott sent detailed questionnaires to 10,500 directors and non-executive directors of UK stock market companies. The survey results are based on replies from 614 of them.

It is not all grim reading for Labour. Many of those who were surveyed are dismayed by the Conservative government. "The Tories deserve to lose," one director of a quoted company said. "The job could hardly be tackled less effectively," another said. But for all their reservations, they still believe another term of Conservative rule would be better than a Labour government. "However poor the Tories are, at least they try to do the right things," was the plaintive comment of one director.

Personal wealth and the impact Labour will have on their earnings featured highly in directors' qualms about Mr Blair. More than half those responding - 56.6 per cent - think a Labour government would curb executives' pay and perks.

It is the effect on their own businesses, though, where the impact of Labour will hurt most, and where assurances are simply not getting through. Some 64.4 per cent of those replying believe Labour would increase National Insurance contributions in the short-term. Over half of those surveyed predicted an almost immediate rise in corporation tax.

Even more alarming for Mr Blair is that after all his attempts to distance new Labour from the trade unions, 58.9 per cent of those responding fear a resurgence in union power. They predict the political influence of the unions would almost immediately increase both in Downing Street and in the workplace.

Repeated attempts by Mr Brown to convince business he would maintain a tight grip on the nation's purse strings appear to have failed. More than 90 per cent believe the public sector borrowing requirement will rise in the long-term.

There is, however, one bright spot in the otherwise unremittingly gloomy survey for Labour. A significant proportion of directors believe that the party would take effective steps to increase Britain's manufacturing base. But even here, more than half still believe Labour would not be able to deliver the goods.

A few lone voices speak up for the party. "A Labour government is vital for the future of Britain. The social divides, the wealth divides, the lack of personal responsibility now apparent, will otherwise continue to have a corrosive influence," one director told the survey.

But the view which appears to sum up boardroom opinion, according to the survey, is: "Once in, [a Labour government] will be the same dreary government it was before, with inadequate little men, Ms Beckett et al, floundering around."