UK bosses were markedly more pessimistic about the economy in May than a month earlier, a new survey has shown, ending a trend of rising confidence levels since the start of the year.
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The confidence tracker from the Institute of Directors (IoD), a body for business leaders, has now been in negative territory for 12 months. A negative score means more company directors are pessimistic about the economy than are optimistic.
Lack of confidence in the UK economy has seen business investment dry up since the Brexit referendum. A global economic slowdown and international trade wars have weakened global demand and provided a tough backdrop.
Surveying 900 directors, the IoD’s tracker of confidence in the business climate fell eight points to minus 28 in June.
Yet the IoD said businesses’ views of their own prospects were still “reasonably resilient”, with a score of 27 in May. This was a decline from April, however.
Business leaders said the factor having the most negative impact on their organisations were the weak economic conditions in the UK.
Half of the directors polled by the IoD said Britain’s uncertain trading status with the European Union was damaging business.
Meanwhile 40 per cent said skills shortages and compliance with government regulation were respectively holding back their firms.
Tej Parikh, chief economist at the IoD, said political uncertainty “has been taken to extremes over recent years”.
“It speaks to the underlying strength of the UK’s business leaders” that “the labour market has continued to confound expectations and exports have been relatively resilient,” he said.
“The long-standing concerns of enterprise must form a central part of the UK’s growth agenda going forward.”