LONDON, Apr 14: British businesses are scaling back their expectations about investment due to uncertainty about next month’s national elections, a survey of finance directors showed today. The May 7 national election and the likelihood of policy changes posed the biggest concern for business, the executives said in the survey by accountancy firm Deloitte. The election is the most unpredictable for generations. Neither of the main parties – Conservatives and Labour – has had a sustained lead in opinion polls which point to another five years of coalition or a minority government. “Having spent most of the last eight weeks worrying about the economy and financial matters, CFOs are now focused on political risk,” Deloitte’s chief economist Ian Stewart said. The survey expectations for capital expenditure had dipped with a net 53 per cent of executives saying UK corporates will increase spending in the next 12 months, down from a high of 80 percent in the first quarter of 2014, Deloitte said. A sharp slowdown in business investment could hurt Britain’s growth prospects. Stewart said executives were most worried about the risk of increased red tape after the election, followed by concerns about changes to taxation and financial regulation. “There is a considerable concern the environment will change for the worst after the general election,” he said. Earlier this month more than 100 business leaders said a change of course for Britain’s 2.8 trillion dollar economy under a Labour government would put the economic recovery at risk. A Conservative win, however, raises the prospect of a referendum on Britain’s membership of the European Union which could result in a split from the country’s biggest trading partners. Stewart said the willingness of corporates to take risk onto their balance sheet had fallen despite positive growth forecasts and rising equity markets. “Risk appetite appears to have decoupled from its usual drivers, the economic outlook and equity market performance,” he said. “This provides an ominous reminder that the business recovery is not assured.” Deloitte questioned 180 chief financial officers from major companies between March 6 and 23. (AGENCIES)
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