BBC BREAKFAST WITH FROST
CHIEF EXECUTIVE, CBI
NOVEMBER 4TH, 2001
Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used
Well we saw how the party conference season was dominated by September the 11th of course, and now it's the CBI's turn to have a conference at a time when everybody's now nervously watching what's going to happen to the economy, both here and in America. Their conference starts today in Birmingham but their Chief Executive, Digby Jones, is here with us this morning. Digby what is your view and the CBI's view on the fallout from the various crises that are facing the economy at the moment, Gordon Brown seemed in various quotes today to be a little bit optimistic that Britain was going to avoid the worst of it and Britain was going to avoid a recession, what, what do you think?
Yes I'd agree with that, September the 11th accelerated many of the events that was going to happen anyway, the economy was already in downturn. Britain is the, per capita, the biggest trading nation on earth on export and import so what happens in America, what happens in Germany, what happens in France will impact directly on our exporters and on our tourist industry and our farmers because we are a very integrated part of a world economy. So in that respect there are sectors, airlines come to mind, manufacturing exporters, who are in recession of a type but that's not a general recession, in that I think the Chancellor is right, we are not actually at the CBI forecasting general recession in the United Kingdom next year. The consumer, God bless him and her, are still at it and that's, that's fantastic because of course that stimulates the economy. But it's, it's going to be a very difficult winter but it's not actually general recession time for the UK.
And what would you like to happen to interest rates in the short term?
We think that half a per cent cut when the Monetary Police Committee meet next Wednesday and Thursday, if they were coming out with half a per cent, not a quarter per cent cut, but half a per cent, two things would happen. One is that consumer would still get there just at the really important high street time of Christmas and still be spending. But more importantly business would have that stimulation to invest because one of the worrying things of the downturn right now is a lack of investment intention and a lot of companies are saying we're going to put it off, probably not cancel that investment decision but put it off and that is one of the big impacters on whether there is growth next year and half a per cent cut would make that sign that money's available, that people can invest with more confident.
How many jobs are at risk over this difficult winter?
One of the interesting points about the cut in, in jobs throughout the private sector, the ones that have made the headlines, is the overall level of unemployment in the country hasn't actually changed and that means that one, the public sector investment in transport and education and the health service is mopping up some of those jobs which is a good thing. And secondly of course there is a skill shortage in Britain so if you're a skilled man or woman and you're working somewhere and there is restructuring of your company means that you're going to be asked to go, there will be another company down the road that can't wait to have you because there just aren't enough skilled people in Britain. So it's a different picture to the '73, '81 or '91 recessions because Britain's in better shape, low interest rates, low inflation, low unemployment, we're a bit like a boxer, we're going into a 15-round fight, we're in about round three but we're in good shape. Now it's going to be a hard fight but that's not the same as a general recession and, and a big meltdown.
Absolutely clear, now what, one other thing, what, what about the Euro, do you think that there ought to be, definitely, a referendum on the subject of the Euro in this Parliament?
We are a member organisation and everybody knows and we are a reflection of society which means that we are a divided church as well and in that my job is to reflect the views of my members and we are, as we speak, going out to our membership and saying what do you want to do, do you want us to go with another survey to deal with the facts, a small business, a big business, one in exporting, one in retail, how about one in Yorkshire and one in Devon, because the CBI is of that broad church and indeed that widespread church. So we are actually at the moment going out and saying what do you think there should be. One thing that's coming back from that sounding is that the CBI does feel that there ought to be another survey by our members some time in, say about summer next year, after notes and coins have come in, so there's a bit of experience there and after we see where the economy's going, so we can see how Britain's doing. Now in that respect we feel that that would inform the economic debate because one thing I think anybody listens to this programme would actually feel is there's not enough clear neutral information out there, there's a lot of, probably right in a democracy but it's biased information and we think we could give a lot of good solid economic background to it which would inform people who make the democratic decisions on whether there should be a referendum and that of course is a political decision where the CBI doesn't walk.
Where, where the CBI doesn't walk. Thank you very much Digby for being with us this morning, and good news your projections for our economy, you said once it's not Armageddon but we're in a for a rough ride, that's what you've really said this morning but in a fuller way, thank you very much indeed.