Business leaders have warned Boris Johnson that the crisis engulfing his government risks undermining business confidence and potentially tipping the UK into recession.
Tony Danker, the director general of the CBI, said he thought the UK could still avoid entering recession in the coming months.
But he warned: “There’s a very simple chain of events, which is when business confidence is high businesses invest and grow, recession is avoided.
“When business confidence falls, investment falls, and it is the only thing at the moment stopping us from recession. So anything that can be done to boost business confidence, to demonstrate that actually the government is incredibly serious and purposeful about growth will work. But if we have a summer of politics like we’ve had in the last week, that will undermine confidence.”
The prime minister declared that economic growth was his top priority as he sought to relaunch his government after 4 in 10 of his own MPs voted to oust him from Downing Street last week.
Mr Johnson is also facing a growing clamour for Tory MPs to announce large-scale tax cuts, following complaints his administration is not Conservative enough.
But Mr Danker also warned that “massive” tax cuts, or huge pay settlements, would “overheat” the economy.
