Business leaders want Clarke as chancellor

LONDON Tue Apr 27, 2010 1:36pm BST

Conservative Party business spokesman, Ken Clarke (L), listens as shadow chancellor, George Osborne, speaks during a news conference in London March 29, 2010. REUTERS/Suzanne Plunkett

Conservative Party business spokesman, Ken Clarke (L), listens as shadow chancellor, George Osborne, speaks during a news conference in London March 29, 2010.

Credit: Reuters/Suzanne Plunkett

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LONDON (Reuters) - Business leaders have serious doubts over the Conservative Party's choice of chancellor-in-waiting, and fear an inconclusive election next week will hit the economy, a Reuters poll showed.

Support for Prime Minister Gordon Brown among the chief executives and finance directors surveyed was almost non-existent, while backing for current Labour Chancellor Alistair Darling was little better.

Top choice for the next chancellor was Conservative business spokesman Ken Clarke, a political veteran.

The former chancellor, who slashed a big budget deficit in the mid-1990s, polled well ahead of Conservative Shadow Chancellor George Osborne, who would have to tackle a far larger deficit if he got the job in a Conservative government.

The survey of 58 executive directors at companies employing over 350,000 people in Britain between them, also showed 90 percent fear the increasingly likely scenario of an inconclusive result in the May 6 election would harm economic recovery.

"A hung parliament in my view would have a major negative impact on the economy. It would in my opinion affect the value of sterling, drive inflation and delay decision-making on the key issues for recovery and the future growth of the economy," said the head of one well-known high street retailer.

The Conservatives are tipped to win most seats in next month's election but opinion polls indicate no party will win an overall majority, producing a "hung" parliament.

"We need rapid action to correct the budget deficit and this will be best achieved by a government with a strong mandate to grow the economy and reduce government waste and inefficiency," said Tim Linacre, Chief Executive of stockbroker Panmure Gordon.

"It is vital, therefore, that the Conservatives achieve a decisive victory at the coming election. The last thing Britain needs on top of its fiscal mess is a hung parliament."

The Reuters survey of leaders at publicly-listed companies, including 34 from Britain's FTSE 350 index of leading firms, showed 43 percent believed a hung parliament would significantly stall economic recovery, 47 percent saw some negative impact and only 10 percent felt it would do no harm.


Of the companies that took part, which between them generate total revenues of over 80 billion pounds a year, some 78 percent said they favoured a win for the traditionally pro-business Conservatives.

Labour won the backing of five percent and the Liberal Democrats three percent but some 14 percent remained undecided.

There was little consensus, however, on who should be in charge of Britain's fragile economy and its tattered public finances.

Top choice was Clarke, a chancellor from 1993-97, who won the backing of 43 percent of respondents, while Osborne won support from 31 percent of business leaders.

Backing for Vince Cable as the next occupant of number 11 Downing Street was 14 percent, putting the Liberal Democrat contender comfortably ahead of the incumbent Darling on 7 percent.

Responses to the survey from 40 chief executives, 10 finance directors, three executive chairmen and five other management board members, were on condition of anonymity although some agreed to be quoted.

"Osborne looks, is, comes across as inadequate and out of his depth," said Robert Ware, Chief Executive of real estate investor Conygar. "Clarke has gravitas, experience and an exceptional track record as a chancellor particularly compared to Brown and Darling."

Strong support for the Conservatives as a party concealed high levels of disillusionment with some of the personalities.

Some 67 percent of respondents thought Conservative leader David Cameron would make the best prime minister but 16 percent preferred the party's foreign affairs spokesman William Hague.

"I am not a fan of Brown, it's time for change, but the Conservative line up is far from convincing," said the head of one business employing around 400 people who described himself as a swing voter who wants Hague to play a more prominent role.


Brown barely registered in the survey, with just 3 percent backing him as the best choice for prime minister, behind Liberal Democrat leader Nick Clegg on 9 percent.

"The next five years are going to be distinctly traumatic for many people," said Conygar's Ware. "Gordon Brown should not be allowed near any form of government."

The poll of executives at companies with a combined market value of 75 billion pounds, showed 65 percent of them saw public finances as the biggest election issue.

To address the deficit, 62 percent felt cutting public services and/or removing government inefficiencies would be sufficient but 38 percent felt tax increases would also be needed.

In the event of tax increases, 68 percent -- including some retailers -- said the burden should fall on shoppers in the form of higher VAT while 13 percent called for rises in income tax and 13 percent felt corporation tax was the best option. At 4 percent, National Insurance was the least favoured.

In terms of the timing of spending cuts and tax rises, most business leaders agree with the Conservative view that they need to be imposed quickly with 79 percent calling for their introduction immediately or this year. Twenty one percent opted for next year or once the economic recovery is established.

"I fundamentally believe that cuts are needed but not for cuts sake and only when the economy has regained some momentum should we seriously look to realign the public sector," said Drew Johnson, Chief Executive of FTSE 250-listed Eaga which helps make homes and businesses more energy efficient.

"But that doesn't mean we shouldn't get rid of some of the waste and drive for efficient use of resources immediately."

(Written and compiled by Paul Hoskins; additional reporting by the UK Company News, Corporate Finance, Real Estate and Reuters Investment Management teams; editing by David Stamp)