Third of UK directors see high recession risk, says IoD

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Image caption Only 10% of directors think a recession in the UK will be long and deep

One in three company directors sees a high or very high risk of the UK falling into recession this year, a survey has suggested.

The Institute of Directors' (IoD) survey of 1,000 business leaders also said that 53% thought there was a moderate recession risk.

The UK economy shrank by 0.2% in the last quarter of 2011.

The National Institute of Economic and Social Research has predicted a UK recession in the first half of 2012.

A recession is defined as two consecutive quarters of negative growth.

The Bank of England predicts economic growth of about 1% this year. It expects the economy to "zigzag", dipping in and out of growth, but avoid going back into recession.

Euro concern

The IoD's survey of 1,000 business leaders said that only 11% thought there was a low or very low risk of the UK entering recession in 2012.

Some 43% think any recession will be short and mild. Only 10% think it will be long and deep.

The key source of concern highlighted by the IoD's survey was the future of the euro, with half of directors saying there was a high or very high risk of a euro break-up this year.

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

"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, of the euro crisis gets worse, confidence is highly unlikely to return this year."

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