As business confidence collapses, will top bosses make a stand against a hard Brexit?

Fear stalks the business community as it digests the election result, and that shouldn't come as a surprise as Brexit Secretary David Davis and his colleagues talk about crashing out of the EU without a deal

The Institute of Directors says business confidence has plummeted in the wake of the hung parliament (AP)

The economic blow back from the Theresa May’s snap election, and her (apparent) continued plan for a hard Brexit is coming. If the Institute of Directors is right, it's going to get very rough very quickly.

According to that organisation, business confidence has sunk “through the floor” in the wake of the result delivering a hung parliament, with Ms May reduced to going cap in hand in an attempt to secure the support of the hard-right Democratic Unionist Party. It is even lower than directly after the EU referendum result.

What the outbreak of fear among businesses will mean in practical terms is a reduction investment and a reduction in hiring. Throw in the fact that consumers are feeling the squeeze thanks to rising prices and stagnant wages, and the outlook for UK plc is bleak.

The current political uncertainty could have “disastrous” consequence for the UK economy, the IoD’s director general Stephen Martin has warned, and he's not wrong.

In an attempt to limit the damage, I’d imagine that Chancellor Philip Hammond (assuming he still is Chancellor come autumn) will want to loosen the fiscal straightjacket a little, and perhaps a lot.

Throwing more austerity into a bad economic mix? Not a good idea, particularly given that the possibility of yet another election in the short to medium term is very real and the public has had quite enough of that particular economic strategy.

But wait just a moment, Mr Martin isn’t finished. “The needs of business and discussion of the economy were largely absent from the [general election] campaign, but this crash in confidence shows how urgently that must change in the new government,” he says.

Just so. Which brings us to Brexit, of course, by far the biggest issue facing the UK economy, something that could have a far greater impact on business confidence and the country’s economic prosperity than any hung parliament ever could.

Here, the interests of the business community, and that of Britain as nation are more or less in alignment, something that can’t always be said.

Mr Martin says the main priority for the new government should be striking a new trade deal with the EU and he's right about that. Polls suggest that there is no appetite for a hard Brexit among the populace, and particularly not one which sees Britain sailing off into the north sea until it bumps into Iceland. It's chilly up there.

The trouble is, Brexit Secretary David Davis and his fundamentalist pals are still wittering on about the need to walk away without any sort of a deal. “It’s better than a bad deal,” he and the zealots like to claim, when, in fact such a move would represent the worst "deal" imaginable.

Most business leaders will admit that in private and they’re increasingly starting to say so in public.

Mr Davis has used the analogy of a house purchase to illustrate his point, where of course a buyer will walk away from a bad deal.

However, they wouldn’t leave themselves homeless in the process, and that is what would happen to Britain if the Brexit right gets its way and has the country tumbling out with no deal at all.

No study has been commissioned to gauge the likely impact and it’s not hard to see why. Mr Davis appears not to want to risk the possibility of the publication of an inconvenient truth.

Will saner Tories now be prepared to listen to their traditional allies – and funders – in the business community and act to prevent it happening? That's the big question. They need to. Just as people like Mr Martin need to clearly explain what is at stake and the risk Britain faces should the no deal is better than a bad deal crowd get their way.

Ms May has burnished her cabinet with the member for Murdoch Central (Michael Gove) in what looks like an attempt to shore them up, and continues to trot out many of the same delusional statements we heard during the campaign. The business community could play a role in calling her out on that.

Perhaps Mr Martin and his friends might also care to have a few words in the ears of the moderates on the Conservative side. It is in Britain's economic, and its national, interests for them to make the sort of trouble for Mr Davis that he his friends used to make for the Conservative Party.

Just as business leaders need to find the courage to make the case for a sane Brexit, so too do their friends in Parliament.