Directors’ confidence leapt sharply upward following the election, entering positive territory and reaching its highest level since the 2016 EU referendum, according to the latest IoD Confidence Tracker.
In a poll of 952 IoD members conducted in the vote’s aftermath, overall confidence in the economy for the year ahead reached positive 21%, up from negative 18% last month, also marking the largest positive swing recorded by the IoD. Directors’ confidence in their own firms also increased to positive 46%.
The pick-up in confidence was accompanied by a significant increase in leaders’ investment intentions for the year ahead. A net balance of 18% expected their investment levels to increase. Hiring expectations also increased, albeit slightly, while the bulk of members anticipated higher costs in the 12 months ahead, highlighting that the new Government has its work cut out to support the labour market and to cut firms’ mounting costs.
The current state of the economy remained the top challenge, followed by continued uncertainty around the UK’s future relationship with the EU.
For further details, see the IoD’s Confidence Tracker.
Tej Parikh, Chief Economist at the Institute of Directors, said:
“Britain’s directors will be entering 2020 with a little more festive cheer than might have been expected only a few weeks ago. A firm majority Government means that business leaders, whatever their personal views, now at least have a framework around which they can put in place plans to invest, hire, and expand.
“There are undoubtedly some exciting stocking-fillers for businesses in the Government’s agenda. Plans to increase and broaden R&D tax credits are a positive move, as is the commitment to lower business rates and invest in the skills system. For the longer-term, ambitious proposals on broadband, infrastructure, and regional growth are music to the ears of many in the business community who want to finally see the dial shift on the UK’s lagging productivity growth.
“Clearly, however, the uncertainty surrounding the UK’s long-term relationship with our largest trading partner remains a cause for concern. Our members’ confidence has proven sensitive to Brexit developments over the past few years, and this is likely to continue during negotiations in the year ahead.”
Full survey results:
December survey: 952 respondents, conducted between 13-20 December 2019.
For previous surveys, respondents vary between 700-1000.
How optimistic are you about both the wider UK economy and also your organisation over the next 12 months? (Net % optimistic minus pessimistic)
Which of the following factors, if any, are having a negative impact on your organisation?
UK economic conditions
Uncertain trading status with the EU
Skills shortages/employee skills gaps
Compliance with Government regulation
Global economic conditions
Difficulty or delays obtaining payment from customers
Access to, or cost of, finance
Cost of energy