says: "Business leaders face a particularly uncertain year. Hopes for a sustained economic recovery have to be based on private investment and exports. The fiscal squeeze which any General Election result must bring will cut the money in consumers' pockets and squeeze government spending. But several conditions have to be met before those hopes can be realised. Investment will only happen if businesses see reasonable prospects of profitable future markets for their output. Rising productivity has to enable exporters to benefit from the weaker exchange rate; continued depreciation will put unwelcome pressure on interest rates and inflation.
"It is important that whichever party gets elected secures a good working majority and then uses the time that markets have granted to implement a credible plan for correcting public finances. If that doesn't happen we risk sharply rising interest rates as the government struggles to finance its debt. The prospects for inflation are particularly uncertain. It has been the traditional route for reducing governments' real debt burdens, and monetary easing is an unprecedented policy with unpredictable unwinding. Yet major upheavals create many opportunities, and there could be big rewards for those prepared to take well-researched risks as the world recovers."