Hampshire: 60% of directors say business is good

The chief economist at the Institute of Directors met business leaders in Hampshire to discuss the current economic situation in Britain.

Speaking at the Wessex Hotel in Winchester, Graeme Leach told IOD members: “Sixty six percent of IOD members around the country say business is still good for them. Businesses shouldn’t be as worried as the national media would have us believe, but we can’t be as confident as we would like to be. We’re in uncertain times and there are a number of different scenarios that might play out.”

Leach added: “We would need to be more concerned if unemployment figures rise rapidly, if consumers become more cautious, if the savings ratio went up and if interest rate cuts fail to have an impact on the economy.”

But compared to circumstances before the last recession in the early 1990s, we can be re-assured that the inflationary threat is by no means as severe. The corporate sector is in much better shape and this time around, we are not constrained by the ERM.

Nevertheless, he predicted a sharp decline in the economy as the best outcome of the present situation.

He added: “The sharp fall in overall business optimism is very worrying. The Bank of England is in a very tricky position and the risk of making a mistake is high. Only time will tell if they’ve made the right decisions so far. The priority is to squeeze inflation out of the system while keeping interest rates as stable as possible.”

Avril Owton, chairman of the Hampshire and Isle of Wight IOD, said: “Graeme was able to give members a fascinating insight into the economic situation we are all facing at the moment. Although Graeme can’t predict with any certainty what will happen, he did give a very balanced, objective view.”