Business confidence in the UK economy has “fallen off a cliff”, according to a new report.
A poll of 635 leaders by the Institute of Directors (IoD) found confidence had fallen from a high in the summer back to levels last seen in February 2021, at the height of the third lockdown.
The organisation's Directors' Economic Confidence Index – which measures the net positive level of optimism in the UK economy amongst directors – recorded a value of just under zero (-1%) in September 2021, down from +22% in July 2021.
Three out of four leaders surveyed said they expected their costs to be higher in the next 12 months compared with the last year.
Kitty Ussher, chief economist at the IoD, said the business environment has deteriorated “dramatically” in recent weeks.
“Following a period of optimism in the early summer, people running small and medium-sized businesses across the UK are now far less certain about the overall economic situation, and the IoD Directors’ Economic Confidence Index fell off a cliff in September", she said.
“A higher proportion of our members expect costs to rise in the next year than expect revenues to rise.
"This is not helped by the [UK] government’s recent decision to raise employers’ national insurance contributions, which acts as a disincentive to hire just when the furlough scheme is ending.”
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