'Government complacency' leaves UK less attractive for investors

The CBI has blamed "government complacency" over the findings of a survey which revealed that many top company directors think that the UK is becoming a less attractive place in which to invest.

As Prime Minister Tony Blair prepares to speak to the delegates at the employers organisation's National Conference in Birmingham, the CBI has released the results of what it describes as a "deeply worrying MORI poll of more than 250 captains of industry".

CBI Director-General Digby Jones and senior FTSE chairmen and chief executives are expected to discuss the findings with Prime Minister Tony Blair and Chancellor Gordon Brown at the conference.

The survey revealed that around four-out-of-five business leaders believe the UK remains an attractive place to invest and that most expect to expand UK operations. But the survey found that 70% say it had become worse over the past five years and 60% expect it to get worse over the next five years.

Two-thirds of respondents believe the government places a low priority on delivering a favourable business climate, three-quarters said the government is "less business friendly" compared with five years ago and almost the same proportion expected the situation to worsen.

Mr Jones said: "I am pleased with the better performance of the UK economy this Autumn and it is true that so much of our concern originates from Europe and a backward-looking Brussels.

"But when top company decision makers start giving the kind of signals contained in our survey the government must sit up, listen and take action. There is widespread concern about the UK's declining competitiveness and this is starting to feed through to investment decisions. There is no room for any complacency by anyone anywhere."

The CBI expressed concern that a "rising number" of business leaders appear to be looking overseas.

Production is the main function moving overseas but firms are increasingly relocating IT support, call centres, financial operations, R&D and accounts.

Over four fifths of respondents in the poll said costs were the key factor driving firms away - this was followed by regulation and labour skills.

(SP)