Turmoil in the global markets is causing concern across British industry, with the expectation that the credit squeeze will hit the real economy, the Director-General of the CBI has said.

Richard Lambert said: “People are more anxious and worried than for a very long time. There is a considerable degree of uncertainty around business — even those a long way from the City.

“There is a sense of unease around the place, unease about the economic outlook, unease because the word ‘inflation’ has started to come into conversation in the past month or so in a way it hasn’t for some time.”

He added: “I’m sure that the credit crunch will have an effect on the real economy. As things stand today the best bet is that it will be a notable effect but not a dramatic effect.”

Mr Lambert said that in the past banking troubles “have always been about bad loans or collapsed collateral. But this is completely different and it is quite scary because it is very difficult to know what to write off.”

The CBI has revised down its growth forecast for next year from 2.5 per cent to just over 2 per cent.

Amid fears of recession in the United States, Mr Lambert said that he did not believe that recession would hit the UK economy: “There will be a slowing in the economy next year but most businesses will be able to withstand.”

However, he added there were considerable pressures on industry from high energy and commodity costs, anxiety about inflation and the expectation that government spending will slow dramatically.

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