The IoD comments came after the Office for National Statistics estimated that Gross Domestic Product (GDP) for the second quarter of this year fell by 0.5%.
Graeme Leach, IoD chief economist, said: “The revised GDP figures show that the economy is flatlining. Services, which dominate the economy, declined by 0.1%.
“The much sharper fall in manufacturing and construction output is a concern since it’s difficult to see where the kick to growth comes from for any sector. The core problem is the euro crisis and economic uncertainty. Until that begins to ease, the UK economy will bump along the bottom.”
Last week an IoD survey of 1,277 members revealed the damaging impact of low confidence in the prospects for growth and worries over the effectiveness of the government’s reform agenda.
Too little, too slowly
“The government’s reform agenda is pointing in broadly the right direction,” said Leach. “But the overwhelming opinion of our members is that they are doing too little, too slowly. If the coalition wants to break this cycle of low economic confidence, then it needs to take some bold steps that will make a real difference to the cost and complexity of doing business in the UK.”
Leach told BBC Radio 4’s Today programme that, with low growth expectations and the continuing euro zone crisis, “government has to do more on the demand side”.
He said: “The government should take a scythe to the regulatory burden on British businesses.”
Leach picked out reform to employment and planning rules. “We are asking that government do more, so that companies themselves can do more.”
British food campaigner Alexia Robinson told FoodManufacture.co.uk the government could learn lessons about promoting food from the private sector.
Robinson – organiser of promotional campaign Love British Food 2012 – said: “Government should keep messages to consumers simple and not shy from using the message 'Buy British'."
It should also source British food and drink wherever possible. “British food is affordable and gives consumers what they want; and it lifts sales − this has been proven again and again. Even in tough times, British consumers will buy British if you give them reasons to do so.”
Robison said this year’s Love British Food 2012 campaign was “the biggest gathering of retail and catering organisations united in promoting British food”.
Catering group Compass, for example, staged British food promotions in Tesco cafes for much of this year. “The promotion doubled sales in the first weeks and has grown week-on-week,” said Robinson.
Love British Food 2012 is sponsored by foodservice firm Aramark and is supported by more than 70 organisations. Those include: 3663, Brakes, Compass Group, E-Foods, Enterprise Inns, Food and Drink Federation, Fullers, The Garden Centre Group, Hallmark Care Homes, Harrison Catering, Quality British Turkey, Sodexo, Speciality Breads, SPAR (UK), Tesco and Whiting and Hammond.
Watch out for more on the Love British Food 2012 next month.
IoD survey in numbers
- 52% − Expected GDP growth to be lower than last year
- 65% − Thought there is low or zero probability of the UK emerging from recession this year
- 52% − Predicted growth to be higher than in the first half of the year
- 44% − Reported postponing at least one investment or employment decision on account of uncertainties in the business environment.