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UK Business Confidence in the Energy Market Collapses Further

UK business confidence in energy supply has declined to a ‘balance’ of -67%.CBI logo

The ‘balance’ is a measurement of the difference between respondents expecting improvement and those expecting deterioration.

Clearly then -67% is categorically not a ringing endorsement of current UK energy policy and the global energy market.

Indeed the balance in 2014 of -67% compares very unfavourably with prior years 2013 (-54%) and 2012 (-34%).

These are the findings of the latest CBI/URS Infrastructure Survey.

The CBI has also found that businesses are not only lacking confidence in the UK’s ability to deal with a changing energy market but they are also having to now factor these fears into their business plans causing them to step back from critical investment decisions.

Future energy security is blamed by 80% of firms for their conservative approach to investment decisions whilst the equally corrosive effect of high-energy costs is impacting the decisions of 74% of businesses surveyed.

Indeed some 67% of business leaders believe that the UK’s energy infrastructure will worsen over the next five years. With 96% of firms believing that political uncertainty is discouraging investment and 93% identifying political rhetoric as a problem, damaging confidence in markets, not least those in energy.

The CBI’s survey doesn’t only focus on complaints and woe however with fully 89% of respondents advocating the implementation of the independent infrastructure commission proposed by Sir John Armitt as a long overdue measure worth pursuing.

Whether it will come to fruition or not could well be critical weather vane in future business confidence.

Introducing the survey, Katja Hall, CBI Deputy Director-General, said:

“Progress on infrastructure has been a case of two steps forward and three steps back for far too long. While the policy environment has improved, businesses still don’t see upgrades to mission-critical parts of our infrastructure on the ground in practice – and don’t expect to anytime soon.

“Politicians are too often seen as ducking the big, politically difficult questions looming large on businesses’ risk register.

“Where hard decisions have been taken on issues like energy, populist political rhetoric threatens to send us backwards. Just recently National Grid warned that spare capacity margins are at the lowest level in seven years, so building up investor confidence couldn’t be more important.

“We’re at a crossroads. The next government must build on the successful policies of this Parliament, but we also need to see bold thinking and a renewal of the politics of infrastructure, finding a new way to agree upon and then consistently deliver the improvements we’ll need over the next fifty years – not just the next five.”