Company directors’ confidence improved slightly in May from a record low the month before, but investment and hiring intentions plumbed new depths, the latest edition of the Institute of Directors’ Confidence Tracker revealed on today Thursday.
- Business leaders’ overall confidence in the economy increased from -69 in April to -60 in May, while the outlook for their own firms also improved, from -22 to -7. Both indicators remain in pessimistic territory and at their second-lowest readings on record.
- Directors’ investment intentions for the next 12 months fell a further 11 percentage points from April, to its lowest on record. Hiring intentions also reached a new record low.
- The bulk of firms expected their revenue to be lower in the year ahead, while wages were also expected to fall.
Sign up to Policy Voice
In light of the figures, the IoD called on Government to take action in the summer to kickstart investment and support employment as the furlough scheme draws to a close.
The IoD is recommending policies including:
- A 'Recovery Grant' scheme for firms still waiting for support or adjusting their workplaces.
- An increase in the Employment Allowance.
- Greater tax incentives for firms to invest in technology, training and in adapting their business models.
- Measures to ease the burden of business debt, such as ‘student loans’ for small firms.
Read the IoD’s latest Confidence Tracker here.
Data are based on monthly surveys with members. The number of respondents vary between 700-1100. The latest survey was conducted between 20-29 May, with 720 respondents.
Tej Parikh, Chief Economist at the Institute of Directors, said:
“It’s too early to say we’ve turned the corner. While more firms might feel they will be able to ride out the storm, many will struggle to go anywhere fast once it ends.
“Revenue isn’t expected to pick up, which means investment and hiring plans are very much on hold. The Government must pull out the stops this summer. If it holds back too much ammo for later in the year, firms’ recoveries will be slowed.
"When the furlough scheme ends, employment could take a hit. The Government should help companies fill the gap by reducing the cost of hiring. With cash tight, smaller firms could also benefit from tax breaks to adjust to the new normal, while the debt businesses have built up will hold back the economy unless it's addressed."