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Bullish businesses too busy for bah humbug as optimism for 2017 increases

26 Dec 2016

Gherkin in London business skyline

A new poll by the Institute of Directors shows business leaders are cautiously optimistic for a positive year ahead, though cited uncertainty over Brexit and a skills shortage as negative factors on their business’ growth.

More than 60% of IoD members are optimistic or very optimistic about their prospects in 2017, and the net optimism against pessimism figure (+50%) is the highest it has been since the vote to leave the European Union in June. While members are less bullish about the wider UK economy, they remain on balance optimistic, and the net rating of +14% is significantly improved on October’s figure of -20%.

The Institute’s 34,000 members, predominantly drawn from the SME community across the United Kingdom, cited expectations of higher revenue and profitability as particular bright spots. Some 60% expect to increase revenues in 2017 against 15% expecting them to fall. There are also notable improvements since the last survey in the number of firms looking to invest and increase headcount.

The full survey results are below, including comparisons with previous surveys since the Brexit vote.



July

September

October

December

Economy

-8%

15%

-20%

14%

Organisation

25%

38%

25%

50%

Business leaders did, however, warn of a number of concerns that could see their expectations prove over-optimistic. Half felt current UK economic conditions are having a negative effect on their business’ growth, and 45% felt our uncertain trading status with the EU is holding them back. Four in ten complained of a skills shortage and a lack of employees with the requisite skills, demonstrating the need for clarity on a long-term skills strategy and an immigration system that gives businesses access to the talented people they need.

If those barriers to growth prove significant and revenues are squeezed, more than a third would consider reducing headcount (38%) or postponing planned investment (40%).

Simon Walker, Director General of the IoD, said:

“Businesses are becoming used to uncertainty, and while some speculate on what our relationship with Europe might look like in the years to come, employers are getting on with the job of growing their businesses and delivering jobs for the UK. A steady if unspectacular Autumn Statement has clearly settled nerves, and the early signs of the Industrial Strategy are certainly positive.

“Business will now look to Government to lay the groundwork for growth, and considering the skills shortage revealed in this survey, they should start by guaranteeing the status of EU citizens currently working for British businesses.”

James Sproule, Chief Economist of the IoD, said:

“No doubt there are headwinds on the horizon, and if revenues are squeezed over the coming year then there will be consequences. Politicians must now look to build on this optimism with an ambitious pro-enterprise domestic agenda and a constructive start to our European negotiations. Confidence is a funny thing, and it can’t be taken for granted – a misjudged speech or signs that we aren’t making progress in Brussels could signal a sudden downturn.

“The Budget in March remains a vital moment for this Government and the economy as a whole. Encouraging firms to invest must remain top of the agenda.”

Full survey results

Survey conducted Dec 12-22; 844 respondents

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

Wider UK economy

Your primary organisation

Very optimistic

5%

14%

Optimistic

39%

46%

Neither optimistic nor pessimistic

28%

29%

Pessimistic

23%

9%

Very pessimistic

5%

1%

Don’t know

0%

0%

Net optimism

14%

50%


Comparing the next 12 months with the last 12 months, what do you believe the outlook for your (primary) organisation to be in terms of


Revenue

Profitability

Investment

Employment

Much higher

10%

8%

6%

3%

Somewhat higher

50%

38%

25%

27%

No change

25%

35%

50%

53%

Somewhat lower

13%

16%

13%

12%

Much lower

1%

2%

4%

2%

Don’t know

1%

1%

1%

2%

Net

+45

+28

+13

+17


Survey Conducted October 12-27th; 1,071 respondents

Wider UK economy

Your primary organisation

Very optimistic

5%

10%

Quite optimistic

25%

36%

Neither optimistic nor pessimistic

21%

32%

Quite pessimistic

38%

18%

Very pessimistic

12%

3%

Don’t know

0%

0%


Comparing the next 12 months with the last 12 months, what do you believe the outlook for your (primary) organisation to be in terms of


Revenue

Profitability

Investment

Employment

Much higher

6%

5%

4%

2%

Somewhat higher

44%

36%

18%

25%

No change

24%

27%

50%

50%

Somewhat lower

21%

24%

18%

17%

Much lower

4%

6%

8%

5%

Don’t know

1%

1%

2%

2%

Net

+28

+11

-4

+5

 

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

Survey Conducted September 14 -29th; 925 respondents

Wider UK economy

Your primary organisation

Very optimistic

10%

15%

Quite optimistic

38%

41%

Neither optimistic nor pessimistic

18%

26%

Quite pessimistic

28%

16%

Very pessimistic

5%

2%

Don’t know

1%

1%

 

Survey conducted July 14-28th; 1,106 respondents

Wider UK economy

Your primary organisation

Very optimistic

5%

8%

Optimistic

30%

38%

Neither optimistic nor pessimistic

22%

33%

Pessimistic

33%

17%

Very pessimistic

10%

4%

Don’t know

0%

1%

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