Brit Bosses Lose Confidence Over Euro Crisis

Failure to contain the eurozone debt crisis has caused a sharp fall in confidence among senior business leaders, who fear the onset of another banking crisis.

Some 70% of business leaders who answered a survey by the employers' group Confederation of Business Industry (CBI) said their confidence in the economic outlook had fallen since the beginning of August.

The survey of 122 senior figures from FTSE 350 companies, as well as others operating in the UK, revealed that 30% believed their company's prospects had deteriorated.

Despite earlier expectations of an economic rebound in 2012, 57% said they expected no change to the economic outlook.

Only 11% said that their trading conditions had improved amid stark warnings from the International Monetary Fund and World Bank that the world economy had entered a "danger zone".

The survey was released ahead of the CBI annual conference at which the government will be told that a renewed growth strategy must accompany its deficit reduction programme.

CBI director-general John Cridland said: "Business confidence has been hit by the eurozone crisis and fears of a second banking crisis in 2012, so firms are revising their investment and employment plans.

Mr Cridland told Sky News: "We can't actually make Chancellor Merkel and President Sarkozy do anything other than what they want to do but the Chancellor of the Exchequer, the British Prime Minister can still do things that will influence growth in Britain.

"In one week's time we'll have the autumn statement from the Chancellor. If Europe is bringing us down, the Chancellor can bring us up."

The 80% of the CBI members surveyed said that the Government should prioritise investment in infrastructure to reinvigorate the economy, followed by tax cuts for employers and employees.

As politicians struggle to find a solution to the debt crisis within the eurozone - the most important market for UK exporters - the European Central Bank has warned that a mild recession is likely in the region.

British manufacturers that rely on the eurozone to buy their goods are watching nervously as Italian and Spanish borrowing costs hover around levels at which Greece, Ireland and Portugal were forced into accepting bailouts.

High Wycombe-based Hansford Sensors , which manufactures equipment for industrial machinery, has stopped offering credit to new customers in case they cannot pay.

Managing director Chris Hansford told Sky News: "In the past, somebody new would have come along and you'd probably have given them credit and you'd have just monitored it.

"Whereas now we'd definitely, definitely take pro forma; get money up front we wouldn't start manufacturing until we'd actually received the money in our bank account."