U.K. Directors’ Confidence in the Economy Is Falling Off a Cliff

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U.K. directors are the least optimistic about the economy since the height of the winter lockdown after confidence “fell off a cliff” in September, a business lobby warned.

With energy and tax bills spiking, a fuel crisis biting and government support for workers being withdrawn, people running small and medium-sized businesses are broadly negative about the economic outlook for the first time since February, according to an Institute of Directors survey released late Thursday. That’s in contrast to a surge in confidence during the summer.

The IoD has requested an urgent meeting with Chancellor of the Exchequer Rishi Sunak before this month’s budget to discuss the business implications of a payroll tax hike due to take effect in April.

In a letter to Sunak, the group expresses concern that “Parliament is being asked to agree legislation with significantly negative economic and business impacts without having the evidence before them of the extent of that impact.” With an increase in the tax levied on company profits also looming, the government should consider scaling back the planned increases, the IoD said.

Three-quarters of directors polled by the IoD are bracing for higher costs in the next 12 months, little more than half predict higher revenue and firms expecting to increase business investment are in a minority. The responses illustrate the storm clouds gathering over the recovery, with consumers also turning worried in the face of a looming squeeze on living standards.

“The business environment has deteriorated dramatically in recent weeks,” said Kitty Ussher, chief economist at the IoD. Business chiefs are now “far less certain about the overall economic situation.” The survey of 635 directors was carried out Sept. 13 to Sept. 27.

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