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IoD: Directors’ confidence in the economy lower but steadying

01 Nov 2021

The IoD’s Directors' Economic Confidence Index fell slightly from -1 in September 2021, to -6 in October 2021. 

  • Although this was a further fall in confidence from the high of +27 recorded in June, the rate of decline is steadying. 
  • In contrast, directors' confidence in the prospects for their own organisation, which had also declined from June (+50) to September (+35), returned to higher levels in October (+46). 
  • Expectations of rising wages in the next 12 months continues to be high. In October 62% thought wages would increase in the next 12 months, compared to 61% in September and 52% in June.  Correspondingly, the proportion of directors who think costs will rise also remains high at 77% (75% in September). 
  • However, there is more positive news in terms of revenue, investment and employment with more business leaders thinking each of these will rise than in September. 

Kitty Ussher, Chief Economist at the Institute of Directors, said:  

"Directors are still nervous about the state of the UK macroeconomy, in contrast to the exuberance of the early summer, with October's data continuing to show more people pessimistic than optimistic about prospects for the wider UK economy in the year ahead. Nearly nine in ten business leaders expect inflation to be higher than the Bank of England's target in 2022 and wage pressures are also being felt acutely.

"However, within that, there are encouraging signs that business leaders are feeling more positive about prospects for their own firms than last month, with correspondingly steady increases in investment and employment intentions. Whether this is sufficient to fulfil the OBR's prediction of a massive 16% increase in business investment across the economy next year is, however, far from clear.”

The Directors’ Economic Confidence Index measures the net positive answers from its members to the question ‘How optimistic are you about the wider UK economy over the next 12 months?’ on a five-point scale from ‘very optimistic’ to ‘very pessimistic’.  

The back series, including graph, is available from July 2016 here. New data points will continue to be made available on the first day of each month containing data obtained from a survey of IoD members that is in the field during the previous month. 

Full survey results  

608 respondents, conducted between 13th-29th October 2021.  

How optimistic are you about the wider UK economy and also your organisation over the next 12 months?


Very optimistic

Quite optimistic

Neither optimistic nor pessimistic

Quite pessimistic

Very pessimistic

Don't know

Wider UK economy

6%

31%

21%

30%

12%

0%

Your (primary) organisation

12%

46%

29%

11%

1%

0%

* The Index is a calculation of ‘% optimistic - % pessimistic’  

Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:


Much higher

Somewhat higher

No change

Somewhat lower

Much lower

Don't know

Revenue

10%

52%

23%

11%

3%

1%

Cost

16%

61%

18%

4%

1%

1%

Business investment

6%

31%

47%

10%

5%

1%

Employment

4%

33%

51%

8%

2%

1%

Employee wages

7%

55%

31%

4%

1%

1%

What do you think the annual rate of inflation will be by the end of next year? That is, by the end of 2022.


Total

Total

608

Less than zero (i.e.prices will fall)

0%

Between zero and the Bank of England's next target of 2%

2%

Around the Bank of England's target of 2%

10%

Higher than the Bank of England's target of 2%

49%

Between 4% and 6%

33%

Higher than 6%

4%

Don't know

2%


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