The crisis-hit eurozone, Britain's enormous budget deficit and spiralling unemployment will see the British economy worsen this year, according to a new survey of business leaders. More than half of Britain's top business people (56 per cent) expect the economy to get worse over the next 12 months. Less than 10 per cent believe there will be some improvement, according to the Captains of Industry survey, conducted by pollsters Ipsos Mori.
The bleak outlook is likely to be underlined this week when a slew of results for the Christmas period from major high street retailers including Marks & Spencer, Tesco and Debenhams are expected to show weak trading. A spokesman for the British Retail Consortium, the industry body, said: "There is no immediate reason to think that customer sentiment or the wider economy will improve. Generally, retailers are concerned they will still be under pressure well into 2012."
Retailers are suffering from the costs of doing business, the spokesman added. "The business rates, the rental terms and the parking and access fees – and town centres are not always the safe, attractive places that people want to go to. This is on top of an incredibly tough 2011, which saw heavily discounted promotions, similar to the dark days of 2008, used to draw in customers."
The survey of 100 senior board directors of FTSE 350 companies said increases in government regulation presented a growing drag on business. More than half (55 per cent) believed that an increase in government regulation in the past year had had a negative impact on businesses.
However, it was not all doom and gloom, as other areas are expected to offer a glimmer of hope for the UK economy, according to the survey. Those questioned were optimistic about the technology, media and telecoms sectors having the greatest potential for growth. Britain already performs strongly in the technology and telecoms industries, with 43 per cent stating that the UK enjoyed an advantage over other countries.
Figures from UK purchasing managers this weekend also showed that the service sector is still growing.
Despite this, 66 per cent of respondents said the economy needed to decrease its dependence on service industries in favour of manufacturing, which they ranked second as having the greatest potential for growth in the coming year.
Neville Bain, chairman of the Institute of Directors, said: "We have some good niche manufacturing areas – I'm thinking of aerospace, for example – and if you look at Germany's performance, they are being pulled along by manufacturing. So if they can do it with their productivity, which is high, and with their organisation, which is good, I see no reason why we can't do well too. In general terms, though, there's unlikely to be anything other than a flat performance where GDP is concerned, but there are sectors that will grow. The service sector is looking reasonably strong," he added.
John Cridland, the CBI director-general, said: "2012 is going to be a hard road but if we are canny and act now to put in place solid economic foundations, we will secure a better future for ourselves and our families. There are no easy answers when it comes to securing long-term growth. The faltering recovery with family and business budgets under pressure and the ongoing crisis in the eurozone are stark reminders of the need to rebalance our economy away from household and government debt. If we fail, the UK's debts will continue to grow and our trend growth rate will remain low. Only through rebalancing can we return growth to long-term sustainable levels."
Sir Richard Branson is regarded as the UK's most impressive business figure by his peers, according to the survey. Polling 12 per cent of the votes, he came top, followed by the advertising magnate Sir Martin Sorrell (at 10 per cent) and the former Rolls-Royce boss Sir John Rose and John Lewis leader Charles Mayfield, who both took 9 per cent of the votes.
Italy's new premier says his government is doing its part to overcome the European debt crisis and has called on other EU nations to do the same.
The Italian Prime Minister, Mario Monti, said yesterday that no European country is strong enough to go it alone in the face of the global economy. He didn't single out any country, but some critics have felt that Germany has been putting its own economic policy ahead of EU-wide interests. Appointed in November to try to avert financial disaster in Italy, Mr Monti says Europe must have a common policy for growth.Reuse content