Business leaders confidence rises slightly in December
According to the IoD Economic Confidence Index, investment intentions rose to 0 in December, up from -20 in November
The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, crept up to -61 in December 2024 from -65 in November.
This nonetheless represents the fourth lowest reading of the index since its introduction in July 2016.
Business leaders’ confidence in their own organisations also rose to +8 in December, from -7 in November. However, this is still the second lowest reading of this indicator since June 2020.
There was a corresponding improvement in the underlying indicators, but they still sit well post-pandemic trend levels: investment intentions rose to 0 in December, up from -20 in November; headcount expectations rose to -1, from -24 in November; export intentions rose to +6, up from +2 in November and revenue expectations rose to +19, from +4 in November.
Anna Leach, chief economist at the Institute of Directors, said: “IoD members remained cautious on the outlook for the year ahead when we surveyed them over the festive period. Although it was positive to see improvements in all our forward-looking economic measures, they remain substantially below the averages for the first half of 2024 as forthcoming tax increases loom large.
“It is welcome to hear of government commitments to stable and long-term policy making that facilitates business planning and investment. But it takes more than stability to deliver growth and government rhetoric on investment is increasingly out-of-step with business reality. Our data shows that business leaders are proceeding with investment in areas such as technology, workforce training and R&D, motivated by desires to increase efficiency, launch new products and services, and expand their businesses.”
She continued: “But profit uncertainty is the greatest constraint they cite and almost a quarter of business leaders are planning to make no investments this year. The government must move swiftly to deliver a policy environment in the UK that strengthens investment, with Industrial Strategy, 10 year infrastructure plans and planning reform presenting material opportunities.”
