Confidence drops as Eurozone crisis unfolds

The continuing Eurozone crisis has caused a sharp fall in confidence among senior business leaders, the Confederation of British Industry has said.

According to a study of 122 business leaders by the lobbying group, 70 per cent say their level of confidence in the economic outlook had fallen since the beginning of August.

Despite their forecast, only 30 per cent of business leaders believe their own company’s prospects have deteriorated, with a majority (57 per cent) saying they’ve stayed the same, and around one in ten (11 per cent) saying they’ve improved.

However, 59 per cent are likely to revise their business strategy. Nearly two fifths (39 per cent) are not making changes, but some are planning to ‘wait and see’ before reaching decisions.

CBI director general John Cridland says, ‘The survey shows that business confidence has been hit by the Eurozone crisis and fears of a second banking crisis in 2012, so firms are revising their investment and employment plans.

‘Business leaders believe the government is right to stick to its deficit reduction strategy, but that it must go hand-in-hand with some fresh thinking and a more creative growth strategy.’

Despite the sharp fall in confidence and the increase in economic uncertainty, 82 per cent of business leaders are firmly behind the coalition government’s deficit reduction strategy and do not believe that it should be scaled back.

When asked which specific areas the Chancellor should focus on in his autumn statement to stimulate growth, if he has room for manoeuvre, 80 per cent say investment in infrastructure should be a priority, followed by cutting employment taxes (57 per cent), business taxes (48 per cent) and income taxes (42 per cent).

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