One third of directors see a high risk of recession in 2012

One third of UK directors believe there is a high or very high risk of recession this year, according to a survey conducted by the Institute of Directors (IoD).

Of the 1,000 directors surveyed, 53% also said they thought there was a moderate risk of another recession.

Just 11% said they thought there was a low or very low risk of the UK entering recession this year.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

A recession is usually defined as negative growth in two consecutive quarters.

If a recession were to occur, 43% believe it will be short and mild, while just 10% think the economy would suffer a sharp and extended dip.

The Bank of England last week said it predicts that the economy will "zig-zag" throughout the year, growing about 1% and avoiding a recession.

Significantly, the IoD survey also revealed that half of directors believe there is a high or very high risk of the euro breaking up this year.

Graeme Leach, Chief Economist at the IoD said: "The resounding message from the survey is the critical role of confidence at this stage in the economic cycle.

"The key group to watch is the 'swing vote', the 1 in 2 directors who think there is a moderate risk of a recession. Whether this group becomes more pessimistic or optimistic may well be the difference between recession and recovery in 2012."

"If the euro crisis stabilises, confidence could return relatively quickly and companies could dust down business investment and recruitment plans put on hold last year. Alternatively, if the euro crisis gets worse, confidence is highly unlikely to return this year."

NR