Director Weekly  The Budget did nothing to reinvigorate business confidence – and news that the economy shrank in October further underlines the weak state of the economy

The Chancellor was at pains to emphasise her frustration at this week’s Treasury select committee appearance. “There were too many leaks,” she admitted. One particular leak to the FT, which revealed that the rumoured income tax increase had been shelved, was “incredibly damaging and frustrating” (and is now subject to a leak inquiry). “We cannot allow this to happen again,” concluded Reeves.

Businesses will hope she delivers on that pledge. There are machinations around the contents of every Budget – it’s part of the process – but it was highly unusual to see them played out so publicly.

That really matters, because such uncertainty has real-world effects. Recent business surveys persistently highlight fragile client confidence, risk aversion, delayed decisions, and subdued investment, while costs keep rising. Having wholly unnecessary policy uncertainty heaped on top of that toxic mix was deeply unhelpful.

The latest GDP data data underscores the real economic damage that has been done by mishandled messaging surrounding the Budget. The economy contracted 0.1% month-on-month in October, against a consensus expectation of 0.1% growth. Output is struggling to recover in the automotive sector following the Jaguar Land Rover shutdown, but construction output also fell. Zero growth in services – compared with 0.2% growth in the quarter to September – is a reminder that consumer confidence is damaged by policy confusion, too.

My conversations with IoD members this week have reinforced the sense of gloom. On top of frustration over the Budget shambles – and continued concern about employment rights reforms – there’s disappointment that previous policy announcements are yet to have much impact on the ground. Welcome initiatives to boost infrastructure investment appear stalled – as at Heathrow, green-lighted as the preferred option for expanding airport capacity in the south east, but still waiting for significant decisions to allow it to move forwards. Directors see grand ambitions giving way to policy inertia.

Businesses desperately need an acceleration of pro-growth policies. It’s time for government to refocus on ensuring that capital spending commitments reach the ground; that planning reform delivers real change; and that regulatory blockers don’t choke off investment.

In similar vein, last week’s announcement that elections for four new regional mayors will be delayed until 2028 is disappointing. An IoD member in Manchester struck a rare positive note in this week’s discussions when speaking about the impact of Mayor Andy Burnham in supporting local businesses, and the government is right to be increasing the number of mayors.

The theory, developed by bodies such as the Productivity Institute, is that devolution to mayors and strategic authorities will provide greater policy stability and a longer-term outlook, yielding a significant productivity payoff over time. But it takes time – so the sooner new mayors can get up and running, the better.

For now though, the waiting continues. For businesses in search of a spark of optimism, it’s all eyes on the Bank of England for Thursday’s interest rate decision.

Read more on our latest survey of directors here.