Business leaders’ confidence in the UK economy has hit its lowest point in 2018, according to a new survey of members of the Institute of Directors, which is charged with lobbying the government and setting standards for corporate governance in the UK.
Confidence had risen substantially in December of last year, following the achievement of “sufficient progress” in phase one of talks to pull the UK out of the Europan Union by March 2019, the institute, which was founded in 1903, said in a statement. However, while optimism remained weak but stable throughout most of the year, the summer months have seen it slide.
The data was gleaned from the Institute of Directors’ policy-voice surveys, which form the basis of its ‘Confidence Tracker’, which gauges the opinion of company directors every quarter.
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Tej Parikh, a senior economist at the Institute of Directors, said that firms’ investment decisions were “clearly sensitive to Brexit developments”, and queried the Bank of England’s decision to raise rates by 25 basis points in July before the key negotiations in October, which will encompass the all-important UK trade relationship with the European Union.
Brexit isn’t the only burning matter for British firms, the statement noted. The pound has struggled against the euro – remaining below the EUR1.120 mark – despite the positive UK retail sales data for July last week, which beat expectations thanks to the summer heatwave, the World Cup and a strong growth in online revenues.
“Larger businesses, in particular, have been buffeted by a variety of headwinds, from oil price rises to the prospect of a trade war,” Parikh added. “Meanwhile smaller enterprises, the backbone of the economy, are suffering under the weight of high costs, skills shortages, and weak productivity.”