Business chiefs in the UK are at their most disheartened since the early days of the Covid pandemic.
Soaring inflation and Brexit pains have crippled confidence on economic outlook with consumer confidence at a historic low.
The Directors’ Economic Confidence Index by the Institute of Directors, a measure of economic confidence of over 400 business leaders, dropped to minus 60 in June. This is the lowest since Covid first took hold in the UK in early 2020 and a decline from the minus 45 level from April.
Inflation at 40-year highs in the country was cited as the most frequent reason for the gloomy view, with the difficulties on EU-UK trading relationships with Brexit coming in next. Shortage of skilled workers, higher taxes, and the UK’s economic conditions were major reasons.
“Inflation is not only raising costs but is also raising concern about the macro-economy to levels not seen since the early days of the pandemic,” said chief economist at the IOD, Kitty Ussher.
“Although many business leaders are still planning for growth, they see the external economic environment as working against them, in the form of inflation, staff shortages and the government’s own decision to raise employers’ national insurance.”
87 per cent of business owners expected their costs to rise in the next 12 months. 13 per cent are planning to reduce their headcount while 19 per cent are planning to reduce investment.
However, 33 per cent are planning to increase employment in the year ahead and 31 per cent are to raise investment.
431 responses were conducted between 13-27 June 2022.