Business Leaders Say Stop The Doom And Gloom On The Economy

Dated: 21 February 2012

A new survey of 1,000 business leaders by the Institute of Directors (IoD) shows that companies are relatively confident despite the weak economic outlook:

2012 UK Economic Outlook

  • Only 35 per cent of business leaders think there is a high or very high risk of a recession in 2012. But a further 53 per cent think there is a moderate risk of a recession. In addition, 11 per cent of directors think there is a low or very low risk of recession this year.
  • In sharp contrast to the recent deep recession, company directors are confident any future recession will be mild. 43 per cent think any recession will be short and mild and 33 per cent that it will be long and mild. 7 per cent think it will be short and deep and 10 per cent state it will be long and deep.
  • Despite the weak UK macroeconomic outlook, companies appear to be relatively optimistic about their own prospects, with 50 per cent expecting higher or much higher revenues in 2012 than in 2011. This compares with 27 per cent expecting lower or much lower revenues.
  • Profit expectations are also positive. 40 per cent of companies expect profits will increase in 2012, compared with 32 per cent who expect they will decrease.
  • However, despite relatively optimistic revenue and profit expectations companies appear to be very cautious about increasing business investment and employment.
  • 27 per cent of companies think business investment will be higher this year but this is exceeded by the 29 per cent who think it will be lower.
  • 27 per cent of companies think employment will be higher this year but this only just exceeds the 25 per cent who think it will be lower.
  • The key source of economic concern in 2012 is not difficult to find. 1 in 2 directors think there is a high or very high risk of a euro break-up this year. 12 per cent think there is a very high risk, 38 per cent a high risk, 34 per cent a moderate risk, 13 per cent a low risk and 2 per cent a very low risk of a break-up.

 

Commenting on the results, Graeme Leach, Chief Economist at the IoD said:

“Despite all the doom and gloom in the media only 1 in 3 directors think there is a high or very high risk of a recession in 2012. The key group to watch is the ‘swing vote’, the 1 in 2 directors who think there is a moderate risk of a recession. Whether this group becomes more pessimistic or optimistic may well be the difference between recession and recovery in 2012.”

He added:

“The resounding message from the survey is the critical role of confidence at this stage in the economic cycle. If the euro-crisis stabilises, confidence could return relatively quickly and companies could dust down business investment and recruitment plans put on hold last year. Alternatively, if the euro-crisis gets worse, confidence is highly unlikely to return this year.”

 

A total of 1,067 IoD members took the Policy Voice survey between 24th January and 7th February 2012.

ENDS

Contact Points

Edwin Morgan
Media Relations Manager
Institute of Directors, 116 Pall Mall, London SW1Y 5ED
Tel: +44 (0)20 7451 3392
Mob: +44 (0)7814 386 243
Email: edwin.morgan@iod.com
Website: www.iod.com/policy

Notes to editors

  • The IoD (Institute of Directors) was founded in 1903 and obtained a Royal Charter in 1906. The IoD is a non-party political organisation with upwards of 45,000 members in the United Kingdom and overseas. Membership includes directors from right across the business spectrum – from media to manufacturing, e-business to the public and voluntary sectors. Members include CEOs of large corporations as well as entrepreneurial directors of start-up companies.
  • The IoD offers a wide range of business services which include business centre facilities (including ten UK regional centres [three in London, Reading, Birmingham, Cardiff, Manchester, Nottingham, Edinburgh and Belfast] and one each in Paris and Brussels), conferences, networking events, virtual offices and hotdesking, issues-led guides and literature, as well as free access to business information and advisory services and a comprehensive Information Centre. The IoD places great emphasis on director development and has established a certified qualification for directors – Chartered Director – as well as running specific board-level and director-level training and individual career mentoring programmes.
  • In addition, the IoD provides an effective voice to represent the interests of its members to government and key opinion-formers at the highest levels. These include ministers, constituency MPs, Select Committee members and senior civil servants. IoD policies and views are actively promoted to the national, regional and trade media.
  • For further information, visit our website: www.iod.com
  • You can also keep up to date with the latest views from the IoD on twitter.com/The_IoD and at blogs.iod.com