Business leaders deserting Major

Three-quarters of Britain's managers believe that the schism within the Conservative Party over Europe is harming our business interests and more than half think it is time for a change of government.

The survey by the Institute of Management comes as the political scientist who correctly predicted the outcome of the last election claims it is "almost impossible" to see how the Tories can win the next election.

The views of British managers appeared to support the prediction by Professor David Sanders of Essex University that the best John Major could hope for was a hung parliament.

The Institute of Management survey found seven in 10 managers believed that the Government's policies on Europe had weakened Britain's position within the European Union. Forty-five per cent no longer thought the Conservatives were the natural party of business while 56 per cent thought it was time for the Government to go.

It was the Government's approach to Europe was the major cause of dissatisfaction among those polled. At last week's Tory party conference in Bournemouth John Major largely succeeded in keeping the lid on the row between the party's Euro-sceptic wing and pro-Europeans. But the IoM poll, carried out by Quick Reaction Survey, suggests it is a source of acute concern. Seven in 10 managers feared that a Euro-sceptic agenda - notably a commitment to rule out joining a single currency in the next Parliament - would adversely affect business. More than 60 per cent also said that British membership of the European Union was the magnet that attracted inward investment.

Seventy-three per cent also believed the Government had failed to invest adequately in education and 54 per cent thought it had increased the burden of red tape on business. However, three-quarters thought that the Government's policies had improved Britain's competitiveness and a majority thought it could be trusted to keep spending and inflation under control.

Roger Young, the IoM's director general, said: "Managers believe the Tories ... have lost touch with British business. Europe is the key to Britain's long-term prosperity and managers are concerned that the Conservatives' approach to Europe is damaging the UK's interests."

The bad news for the Tories was compounded by Professor Sander's computer modelling. He told The Independent that the most optimistic result for the Tories in a general election next May was 39 per cent of the vote, level with Labour on 39 per cent, which would leave Labour about eight seats short of an overall majority in the Commons. That would almost certainly ensure that Tony Blair was prime minister at the head of a minority government.