Economic confidence turns positive for first time in a year says IoD

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Business leaders’ confidence in the economy has returned to positive territory for the first time in almost a year, a new survey from the Institute of Directors reveals today.

In a poll of 700 company directors conducted in March, optimism about the UK’s economy came in higher than at any time since Theresa May triggered Article 50 last March. The latest rise in confidence follows an earlier jump after December’s announcement that sufficient progress had been made in the first phase of the Brexit talks.

For the first time since withdrawal negotiations began, the UK’s uncertain trading status with the EU has fallen out of the top three concerns of business leaders.  Economic conditions, skills shortages and compliance with government regulation now occupy the top spots.

While optimism about the wider economy remained low at just 1%, bosses’ confidence in their own companies is much higher at 47%.

confidence chart

Tej Parikh, Senior Economist at the Institute of Directors, said:

“After nearly a year of economic pessimism winning out among business leaders, the scales have tipped gently into the positive. It seems likely that meaningful progress in Brexit negotiations since December has brought some much needed reassurance.

“The sensitivity of business leaders to their political environment highlights the imperative for clear communications from policymakers. The wrong signals or lack of engagement can have a real impact on firms’ investment and employment plans. We urge the Government to provide further detail on its proposals for the UK’s future trading and regulatory relationship with the EU, and to iron out its initiatives to narrow the skills gap and enhance business productivity through the Industrial Strategy.

“While directors’ economic confidence has edged into positive territory, there’s still plenty keeping them on the fence. Positivity has been held back by rising labour shortages and the burden of complying with government regulations, and this should remind us that Brexit isn’t the only game in town.”

Full survey results:
693 respondents, conducted between 8-27 March 2018

How optimistic are you about both the wider UK economy and also your organisation over the next 12 months? (Net Confidence)*

Jan 17 Feb 17 Mar 17 Apr 17 May 17 Jun 17 Jul 17 Aug 17 Sep 17 Oct 17 Nov 17 Dec 17 Jan 18 Feb 18 Mar 18
 Organisation 43% 44% 37% 34% 36% 15% 28% 28% 39% 28% 42% 31% 45% 39% 47%
 Economy 15% 19% 7% 1% -3% -37% -17% -18% -14% -26% -13% -24% -2% -3% 1%

Which of the following factors, if any, are having a negative impact on your organisation?

UK economic conditions 47%
Skills shortages/employee skills gaps 42%
Compliance with Government regulation 42%
Uncertain trading status with the EU 40%
Employment taxes 29%
Business taxes 28%
Global economic conditions 27%
Difficulty or delays obtaining payment from customers 25%
 Broadband cost/speed/reliability 24%
Cost of transport 18%
Cost of energy 17%
Access to, or cost of, finance 15%
Other 5%
None of the above 3%
 Don’t know/not applicable 0%

*number of respondents in other surveys vary between 700-1000