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Economic challenges facing UK businessIpsos MORI SURVEY – NOVEMBER 2011Methodology122 structured telephone interviews ofapproximately 15 minutes conducted between6 th October and 4 th November 2011

Survey sampleSample by sectorManufacturingWhere is the location of yourhead office?15%22%Construction15%24%9%15%Financial servicesRetail, transport &distributionNon-financialservicesOther34%66%UKOutsidethe UK50Sample by global revenueApart from the UK, how many othercountries do you operate in?4014%302035%21%None1-1011-2021-501023%7%Over 500< £100m £500m-1bn £1-5bn > £5bn

Eurozone and banking crisis concerns areweighing on confidenceFactors expected to influence the economy in 2012Eurozone sovereign debtcrisisNo influence Moderate influence Strong influence0 20 40 60 80 100Further banking crisisRising commodity pricesCurrency volatilityLack of growth in the USChinese growth levelsProtectionism and tradefrictionStability in the Middle East

Main risks to business stem from financialinstability and lack of domestic demandRisks to business over the next 12 monthsFinancial market volatility/weaknessMinimal/no risk Significant risk Very serious risk0 20 40 60 80 100Lack of domestic demandRising costsAvailability of financeUnder investmentDomestic competition“People havefactored in thecurrent economicclimate, and it ishaving a bearingon their plans”Overseas competitionLack of export demandFluctuating currencyIndustrial action

Manufacturers more exposed to global conditions45Risks to business over the next 12 months4035+9%Total sampleManufacturing+22%3025+13%20+8%151050FinancialmarketvolatilityLack ofdomesticdemandRising costs Availabilityof financeUnderinvestmentDomesticcompetitionOverseascompetitionLack ofexportdemandFluctuatingcurrencyIndustrialaction

Business strategy is being reappraisedAre you likely to change business strategy?2%Changes to investment and hiring inthe year ahead6039%YesNo4059%Don't know20Aspects of business strategy likely to change0DecreasedIncreasedWorkforce plans0 5 10 15 20 25 30-20Stayed thesame-40Investment plansExpansion plans-60Financial strategyProduction plans-80InvestmentintentionsHiringintentions

Strong support for fiscal consolidationShould the government’s deficit reductionstrategy continue or be scaled back?Preferred measures to stimulateshort-term growthContinue Scale back Don’t know 0 10 20 30 40 50 60 70 80 901%Investment in infrastructureCut in employment taxes17%Cut in business taxesCut in income taxesStimulate the housing market82%Cut in VATIncrease other currentspendingIncrease welfare spending“The most important thing is to demonstrate that wecontinue to be committed to deficit reduction –maintaining credibility is absolutely key”

Investment in infrastructure is key to boosting2012 outlook for businessWhat single government action would most improve the outlook forUK business in 2012?0 5 10 15 20 25 30 35Encourage investmentin infrastructureby business other“The government canengender greaterconfidence by lookinginto infrastructure spend”employmentReduce taxesincome taxcorporatetaxesVATotherSimplify regulationclearer regulatoryframeworkreduceregulationchangeplanning Improvements“There is a need toencourage businessconfidence, to reinvestthe cash surplus that theyare currently sitting on”Increase finance availablity

Economic challenges facing UK businessIpsos MORI SURVEY – NOVEMBER 2011