THE UK economy is ‘in a bad place, with confidence evaporating’, the head of the UK’s biggest employers’ organisation has warned.

John Cridland, director general of the CBI, said that only businesses could dig the UK out of the ‘mess’.

With belt-tightening by consumers and the government, ‘it’s business investment and exports that will lead to British jobs’, he said.

Cridland was speaking ahead of the CBI’s annual conference on Monday.

He said of UK firms: ‘They are not poor, they just don’t have the confidence to invest.’ He added that the biggest single impediment to investing was fears about the eurozone debt crisis.

‘This political problem is draining confidence from businesses.’ Cridland added: ‘If we could resolve the eurozone crisis we could get back on a growth path.

‘For me, the harder the times, the deeper you dig for the solutions that work,’ he said.

He said the CBI was in support of the coalition government, and its members agreed that the most important priority is to press ahead with deficit reduction.

Meanwhile, total mortgage lending fell back in October, the Council of Mortgage Lenders (CML) reported yesterday.

Banks and building societies lent a further £13.1bn, which was four per cent down from September.

The CML said the market was still subdued, with lending boosted by people remortgaging rather than moving house.

However, Richard Sexton of chartered surveyors e.surv insisted that the banks were in no position to increase their lending.

‘Insipid economic growth, and restricted supply of credit are sapping the life from the market and forcing banks to target wealthier borrowers and professional buy-to-let investors,’ he said.

‘A meagre one in every 100 loans were to borrowers with a deposit of 10 per cent or under, compared to 13 in every 100 in 2007.

‘Unless the economy gets moving, and the crisis wreaking havoc in the eurozone dissipates, there is a very real chance the first-time buyer market will enter a state of near paralysis,’ Sexton warned.

Meanwhile the eurozone havoc deepened.

The head of the Bundesbank – Germany’s central bank, which is officially subordinate to the European Central Bank – has openly opposed the ECB coming to the rescue of crisis-ridden Italy and Spain, and being the lender of last resort for the eurozone.

German Chancellor Angela Merkel reinforced that stance saying: ‘If politicians think the ECB can solve the euro crisis, then they are mistaken.’

A fall in share prices was the worldwide response to this position.