In his fourth-floor office overlooking St Paul’s and the City of London, CBI director-general John Cridland seems at one with the world. The 49-year-old from Boston, Lincolnshire, is enjoying the relatively new offices and their proximity to the City and he is confident the economy is in good shape and that his members, who are the lifeblood of the British economy, are generally in good shape, too.
But there is one issue really bothering him and that’s the stagnation in the Eurozone, which he feels, if not addressed, could knock the current trajectory off course.
“What are the headwinds?” he asks, speaking in the run-up to the annual CBI conference which starts next Monday at London’s Grosvenor House. “There’s Russia, and the Middle East, but the biggest headwind is the slowdown in Germany, Italy is in recession and France is hardly growing.”
Cridland’s come to the view that Mario Draghi at the European Central Bank needs to embark on full-scale quantitative easing, something that’s been fiercely resisted so far.
“Germany needs to be prepared to reflate its economy and it should invest heavily in infrastructure. But it needs to see France grasp economic reform and change its pensions provision and labour markets,” he says.
“So if the largest economies get on with structural reform, I would hope we would see Draghi doing some heavy lifting. We need full QE. Draghi has been buying asset based securities but he needs to buy government bonds.
“We’ve got an excellent economic platform [in the UK], but the headwinds are getting stronger.”
Apart from saying what he hopes the top banker in Europe might embark on, Cridland as ever has some advice for UK chancellor George Osborne ahead of his Autumn Statement on 3 December.
Infrastructure is a big issue for him, illustrated by a recent CBI poll suggesting people do not fully trust politicians to carry out the infrastructure projects they feel are necessary to improve the economy.
“Gosh, we really need to invest in infrastructure,” he says. To this end, Cridland is pushing for the government to commit itself to spending around £700m of public money to build a tunnel under Stonehenge, a project committed to in 2002 and cancelled in 2007. “Stonehenge is a world heritage site and we’ve managed to destroy it, because we’ve not put a tunnel underneath it and the A303, a major arterial route, is constantly nose-to-tail.”
Other measures the CBI will be calling for include an increase in the annual investment allowance for small businesses to £250,000, instead of the £25,000 it is due to go down to in January 2016. “We think £250,000 would be a better figure to tackle long-term under investment by small- and medium-sized businesses.”
He also wants business rates to be indexed to the consumer price index rather than the retail price index as they are now.
Next week’s conference will see Labour leader Ed Miliband, with whom Cridland has had his differences over the party’s plans for pegging back power prices and capping bank branches, speaking at the conference.
But is there any bad blood between the two? Cridland says: “There are many things we agree on and many we don’t… The Labour party is too inclined to interfere with markets and to criticise banks. Capping bank branch numbers is not a solution.”
But he adds that he enjoys a healthy dialogue with the Labour leader about skills and education, issues he says he finds much to agree on.
On Europe, Cridland feels there’s much to be gained by staying in and reforming Brussels from the inside. But he thinks more needs to be done to sell the idea of the EU to the younger generation.
“It would be great if more undergraduates spent a year abroad as part of their studies. The next generation won’t see the case for Europe on the basis of the peace dividend alone. We need to excite the younger generation.”
CRIDLAND’S WISH LIST
■ A303. The CBI wants the government to spend around £700m putting a tunnel under Stonehenge – committed to in 2002 and cancelled in 2007.
■ Annual Investment Allowance. The CBI wants an allowance of £250,000 to tackle long-term under investment by small- and medium-sized businesses.
■ Business rates should be tied to CPI rather than RPI.
■ Cridland wants the government to increase its spending on R&D so that combined public and private spending on R&D comes to three per cent of GDP.