Richard Lambert, the Director General for the Confederation of British Industry (CBI) has issued message for the New Year, which predicts a difficult year ahead for British business.
Mr. Lambert said:
Richard Lambert, the Director General of the Confederation of British Industry (CBI) has issued a message for the New Year, predicting a difficult year ahead for British business.Mr. Lambert suggested that:
"The domestic economy appears to have started a cyclical slowdown of uncertain depth and duration. And at the same time, structural changes that are now underway in the global economy pose big challenges for the longer term."
"But it is important not to exaggerate the risks. The most likely outcome for the UK is that the coming 12 months will bring a soft – as opposed to a hard – landing, after two years of above average-growth. If we allow ourselves to get carried away by today’s gloomy headlines, we could talk ourselves into something much worse."
He went on to highlight the key areas in which he felt attention should be given:
"The first is the global credit crunch, which has paralysed the credit and interbank markets since August. So far, its impact has been mainly confined to the financial world. But it is likely to have an increasing impact on the economy at large, in the shape of tighter and more expensive credit for businesses and consumers."
"The second big shock has been the rapid acceleration in the costs of energy, food and other commodities. This will put pressure on profit margins. And because it might also feed through into inflation, it will limit the ability of central banks to cut interest rates at a time when the credit crunch is depressing economic activity," he continued.
However, Mr. Lambert did highlight some positive aspects which will cushion the industry over the coming year, such housing price increases, greater employment opportunities and the Bank of England's firm grasp over inflation.
Mr. Lambert also added that: "Further strong expansion in China and India should help to push world GDP up by perhaps 4% in 2008, which will support our export markets."
Mr Lambert concluded his message as follows:
"So what are the priorities for the CBI in these challenging times? Our
members want us to focus on the key issues that will enable the UK to
prosper in a globalised world. These include the absolute necessity of raising
the national skills and knowledge base at every level. Then there’s the
vital importance of maintaining and strengthening our flexible labour market."
"The urgent need to develop our economic infrastructure, whether it be
in the transportation system or in diverse and secure supplies of power. The
major effort that will be required from business and government together to
take on the challenge of climate change."
"A competitive tax and regulatory regime will be an essential component of our future success. And as worrying signs of protectionism start to appear around the developed world, our members will want us to strain every sinew to defend the rules-based multilateral trading system. So it is a busy as well as a rather uncertain time. We wish our members, and the whole of the British business community, a happy New Year and success in the challenges to come."
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