The confidence of business leaders in the British economy has sunk to its lowest level in over 18 months, find the Institute of Directors’ Confidence Tracker. Anna Tobin reports
The Institute of Directors’ (IoDs’) Confidence Tracker reveals that overall optimism had briefly reached positive earlier in 2018 following the initial agreement of a Brexit transition period, but it has fallen steadily since April and was at its lowest point this month. All regions and nations of the UK are reporting a pessimistic outlook for the year ahead.
The tracker also found that investment levels are likely to remain subdued over the next year, with just 7% of business leaders expecting to increase their investment levels. The chief concerns for directors were the UK’s general economic conditions, the uncertain trading future with the EU and skills shortages.
On a more upbeat note, while business leaders were pessimistic about the economy, they remained relatively confident about the future of their own firms.
“Business leaders are looking ahead to the new year with trepidation about the economy,” said Tej Parikh, senior economist at the IoD. “While we saw cautious optimism emerging when the Brexit talks appeared to be moving towards a transition period after March 2019, that has utterly dissipated now. There can be no doubt that the tumultuous Brexit process is having a damaging impact on firms’ outlooks. The prospect of a no-deal in the near future will be weighing heavily on directors’ minds.
“Uncertainty is already causing businesses to delay investment, hiring decisions and product launches, which also acts to weaken our international competitiveness further down the line. The longer this state of affairs continues, the more we lose by it, even if these effects aren’t apparent in the here-and-now.
“Firms are clearly facing a challenging environment, but our members are still optimistic about their own companies, indicating that the weakness is in politics rather than inherent in British business.
“Politicians must not forget that every day of Brexit confusion is a day we aren’t focussed on the long-term. Leaving the EU has consumed the political agenda since the referendum, deflecting attention from critical challenges we face, including boosting growth across the UK and addressing widening skills gaps.”