Recession leads UK businesses to delay investment
British businesses are delaying investment and employment decisions as fears about a prolonged recession are hurting their confidence, a survey by a major business lobby showed today.
Britain has been mired in recession since late 2011 and the Bank of England has warned that the lack of confidence among businesses and consumers could lead to a downward spiral.
The Institute of Directors (IoD) said a poll of nearly 1,300 of its members showed that 44 per cent 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.
The poll, conducted between 26 July and 3 August, also showed that two-thirds of respondents saw a low chance or no chance of Britain emerging from recession this year, though a majority also expected that the economy would pick up in the second half.
“Business is battening down the hatches in the expectation that the recession will continue for the rest of the year,” IoD chief economist Graeme Leach said.
“Low confidence leads to delayed decisions, and delayed decisions further undermine economic confidence – it’s a vicious cycle,” he added, urging the government to take bold steps to boost confidence.