Ministers have been criticised for ‘ineffective’ policies which could mean that the double dip recession is not going to be as short-lived as previously hoped.
The influential Institute of Directors slammed the government for failing to take decisive action to get the economy back on its feet and said there were ‘serious concerns’ that the credit crunch could last for the rest of the year.
Two out of three of the 1277 members which took part in a survey by the body said they had little or no confidence that the UK would be out of recession before the end of the year.
The chief economist for the IoD, Graeme Leach, said that many companies were now ‘battening down the hatches’ in response to the flatlining economy and would not be looking to either hire more staff or invest heavily until there were signs of revival. He added that although many members believed the government was heading in the right direction, they thought that progress was being made too slowly.
July’s figures will have made disappointing reading because for only the third time in 15 years, the government failed to record a surplus. Official figures registered £557 of borrowing in July compared to the £2.5 billion predicted surplus. The revenue from tax receipts usually provide Treasury accounts with a much-needed boost but this year, payments have been far lower than expected.
It was also revealed that factory orders have fallen to the lowest level so far this year, as the financial pressure caused a drop in consumer demand.
Mr Leach called for the government to take radical action to break what he described as a ‘cycle of low economic confidence’ and said that ‘bold changes’ were required in order to relight the spark of business in the UK.