Confidence among business leaders in the UK dropped in September to its lowest level in nearly two years, with uncertainty ahead of the Autumn Budget holding back investment decisions.
The Institute of Directors (IoD) monthly Economic Confidence Index plunged to -38 last month, from -12 in August, marking the lowest level for the index since December 2022.
While a number of underlying indicators didn’t show much movement over the month – such as predictions about revenues, costs, wages and exports – overall confidence in leaders’ own organisations decreased to +15 in September, down from +23 in August and +36 in July.
Meanwhile, investment intentions sank to -6, from +10 the month before, falling to their lowest since September 2020. Headcount expectations also declined, to +6 from +10.
“IoD members cite ongoing concerns over likely tax increases, the cost of workers’ rights, international competitiveness, broader cost pressures and the general outlook for UK economic growth,” said Anna Leach, chief economist at the IoD.
Leach said there were “a number” of upcoming policy announcements that could support sentiment, such as those covering industrial strategy, business tax and an expected update to fiscal rules to better recognise the contribution of public sector investment to the UK’s asset base.
“These all have the potential to create a more steady environment for business decision-makers in the UK,” Leach said.
