1 in 3 directors think risk of recession is “high or very high”

Posted on February 23, 2012


written by Robert Pollard for New Statesman

New data released by IoD reveals many of Britain’s top bosses fear double-dip.

A third of Britain’s top businesses fear there is a “high or very high” risk of a double-dip recession this year, according to data published this morning.

The Institute of Directors (IoD) have released results of their latest snap survey, which gathered opinions from 1,067 of the country’s top business leaders.

Of those surveyed, 53 per cent felt that the risk of returning to recession in 2012 was “moderate”, with only one in ten feeling that the risk was “low or very low”.

Asked about the longevity of any potential double-dip recession, 43 per cent said they felt it would be “short and mild”, whilst 33 per cent felt it would be “long and mild”.

The findings suggest that companies are more optimistic about their own performances than they are the wider economy, with 50 per cent of respondents expecting “higher or much higher” revenues over the next 12 months than posted in 2011. 40 per cent expect higher profits, whilst 32 per cent are preparing themselves for lower figures.

The data concerning business investment may worry George Osborne. 29 per cent of businesses expect investment in their company to fall over the next 12 months.

Graeme Leach, Chief Economist at the IoD, said in reaction to the results:

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.

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.

Posted in: Business