Business Confidence – View from the Boardoom
By James Tarbit
The recent announcement of Q2’s growth in GDP, upgraded 0.1% to 0.7%, has added to a stream of recent positive economic news for the Government. Commentators are feeling more confident about the UK’s prospects and investment groups are upgrading forecasts off the back of growth seemingly driven increasingly by exports investment, rather than debt-fuelling consumer spending.
The Government has frequently stressed its desire for private enterprise to act as engine for this growth, with spokesmen trumpeting policies like the National Insurance break for UK companies or the gradual decrease in corporation tax as being key enablers for the sector. Despite these moves, and the self-congratulatory glow emanating from Westminster in the wake of stronger figures, it seems business is not yet convinced.
At the British Chamber of Commerce’s annual meeting in March, John Longworth, the Chamber’s Director General, pointed to severe lack of commercial experience in Government, and the associated dangers in terms of business support:
We…have a political class in the tradition of the interested amateur, in many cases having little or no experience of business, and who have generally never run anything. That ensures they are at the mercy of the Mandarins of the civil service.
Despite the further pickup in economic activity since Longworth’s speech, it appears that little has changed in terms of business opinion. In August, Korn/Ferry Whitehead Mann polled FTSE 100 Chairman on the subject as part of its regular ‘Boardroom Pulse’ survey. An overwhelming 89% of respondents agreed with John Longworth that a lack of commercial experience at the top of government continues to inhibit business. Some were particularly vehement in their criticism:
Our standard of political assistance to businesses is truly appalling…
…when politicians interfere in business it is always a disaster.
This is not the first time that FTSE 100 Chairmen have cast doubt over the activities of BIS and the Government. In October, Korn/Ferry asked them about the performance of the Office of National Statistics. More than a third stated they did not believe official statistics accurately reflect the state of the economy. One Chairman went so far as to say that the ONS do ‘significant damage’; inferring the effects of overly-pessimistic forecasts, that later have to be revised upwards, on business and consumer confidence.
This is not to say that business does not appreciate, or benefit from, moves made by Government. Recent figures from Ernst & Young show that the cut in corporation tax has made the UK the most attractive country for entrepreneurs in Europe. Whilst positive, this still leaves us trailing in the wake of our main competitors in Cameron’s ‘global race’. Polling boardroom opinion it increasingly seems that such measures, whilst positive, are not significant when compared to delays on major infrastructure decisions such as the new runway at Heathrow (68% of Chairmen were in favour of a third runway when polled in October).
Many Chairmen in the most recent ‘Boardroom Pulse’ pointed to the partisan nature of politics as a key issue, suggesting that policy should be removed from the political class and ‘sub-contracted’ to business professionals who could make more strategic, and faster, decisions. Looking at the recent debate around the increasingly hard-to-defend and ever more expensive High Speed 2, or the political machinations of our Secretary of State for Business, it is hard to argue with them.