Business confidence slumps ahead of Spring Statement
Business confidence slumped back in February as directors’ frustration with the state of the UK economy grew, new research has shown.
The Institute of Directors’ latest business confidence survey has uncovered bosses’ exasperation with the UK economy and the level of employment taxes preventing them from taking on more workers.
The IoD said its economic confidence index dropped from -48 in January to -63 last month. An indicator for leaders’ confidence in their own businesses also fell from +14 to plus one.
The biggest drops in confidence came around headcount expectations and revenue expectations, research showed.
The industry group revealed that the UK’s lacklustre economy was the most significant concern among over 500 respondents while employment taxes, heavy regulation and geopolitical tensions were also cited as impediments to growth.
The IoD’s chief economist Anna Leach said a recovery in business confidence in January had subsided, with the costs introduced by new red tape in the Employment Rights Bill now rubbing off on businesses.
“Taxes and regulatory compliance remain prominent concerns, and a timely reminder of the importance of the government’s deregulatory agenda and the crucial need for business-friendly tax reform,” Leach said.
“Meanwhile the latest tariff developments have undoubtedly contributed to geopolitical tensions jumping up the risk agenda in board rooms.
“As we approach the Spring Statement, the quietness of the newsflow around policy announcements has provided some welcome stability. But the need for swifter delivery of growth-friendly policies is increasingly urgent.”
Business confidence ‘means jobs are cut’
Shadow business secretary Andrew Griffith said the “government of leftists” had failed to deliver business-friendly policies.
“Falling business confidence means jobs are cut, high streets hollowed out and families have less money at the end of the month,” Griffith said.
“Only the Conservatives will give businesses the environment to grow, including by abolishing business rates for thousands of pubs, restaurants and shops on our high streets.”
The Spring Statement on Tuesday is expected to only feature forecasting updates by the Office for Budget Responsibility (OBR), as opposed to analysis of fresh government policy.
The government has been warned that spending commitments on defence will be left unresolved for several months, with a dispute breaking out between Downing Street and the Ministry of Defence over the pace of investment in UK armed forces.
There are also fears that a radical slowdown in immigration could hit tax receipts, though home secretary Shabana Mahmood is set to double down on reforms at a speech later this week.