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The Institute of Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy has shown a drop in optimism -14 in June 2024 from -3 in May.
The analysis showed notable drops in business leaders’ investment intentions, which fell to +19 in June from +30 in May.
Furthermore, headcount expectations declined in June to +22 from +30 in May and revenue expectations also fell to +39 from +45 in May.
Meanwhile, export expectations continued to remain largely stable, rising slightly to +15 from +13 in June and wage expectations fell from +64 in May to +52 in June.
Business leaders’ confidence in their own organisations also declined slightly to +35 in June, down from +41 in May.
Anna Leach, Chief Economist at the Institute of Directors, said “It’s disappointing to see that the confidence of business leaders has dropped back in June from last month’s three year high to a four-month low. This may reflect a pause in decision-making ahead of the election, but there are broad-based indications of softer activity in this month’s data, with expectations for investment and headcount both falling.
“Alongside signs of economic vulnerability in our data, there are indications that inflationary pressures continue to abate – wage expectations in this survey were the weakest in almost three years. It is to be hoped that this combination helps support a move down in interest rates in August, which will alleviate pressure on businesses.
“There’re plenty of issues for a new government to get into post-election to address the persistent weakness in the UK’s growth prospects. From industrial strategy to skills reform to governance changes that will reinforce the quality of leadership in UK companies, there’s huge potential to be unlocked across the UK.”
