According to at least one source, it would seem that confidence in the UK economy among the country’s business leaders has declined markedly recently, erasing the progress that had been made in this regard since the beginning of 2023.
The source in question is the Institute of Directors (IoD), which maintains a Directors’ Economic Confidence Index, with the aim of measuring the optimism of business leaders on the subject of the UK’s economic prospects.
Specifically, the index declined to a -31 reading in June 2023, compared to the -6 that had been seen in May. It’s a development that indicates those taking advantage of accounting, bookkeeping, and help with VAT assessment in Devon or Somerset from organisations like TS Partners, are expecting a testing time for the UK economy for a while yet.
Why are UK business leaders so downbeat about the economy?
The IoD said that the plummeting levels of UK business confidence shown by its index could be attributed to heightened worries about inflation among the business leaders questioned, as well as – separately – declining customer demand across the country.
Some 834 responses were given by business leaders to the survey from 13th to 30th June 2023. When they were questioned on their optimism for the UK economy as a whole, as well as their own organisation specifically over the coming 12 months, 38.4% said they were “quite pessimistic” about the economy, with an additional 13.9% claiming to be “very pessimistic”.
With regard to their own organisations, there seemed to be greater optimism; a mere 3.7% stated that they were “very pessimistic” about their firm’s prospects in the year to come, although nearly a fifth (17.6%) did describe themselves as “quite pessimistic”.
More than half of the business leaders polled, however, said they were “very optimistic” (8.1%) or “quite optimistic” (42.5%) about how their companies were likely to fare in the months ahead.
As for the exact reasons why those who claimed to be pessimistic about the UK’s economic prospects expressed this stance, 32.8% – the biggest proportion – cited the rate of inflation. Some 22.9% blamed UK Government instability, and 18.8% chose falling consumer demand as the factor best describing why they were pessimistic. A further 18.8% of those polled referred to difficulties in the UK’s trading relationship with the EU.
IoD Chief Economist, Kitty Ussher, said of the findings: “The surge in optimism and business plans that we’ve witnessed in recent months came to a shuddering halt in June as business leaders took stock of worse-than-expected inflation data and what that means for interest rates and prospects for the economy overall.”
Clearly, major tests lie ahead for businesses up and down the UK
As if the last few years haven’t been challenging enough for firms around the UK that are attempting to merely survive (never mind thrive), it seems that a lot of business decision-makers are expecting the tough times to be sustained for at least another 12 months.
Whatever those 12 months bring – or look likely to bring – for your own organisation, our team at TS Partners would be pleased to advise and assist.
Reach out to us today, and we can discuss how we can best serve you in relation to accountancy, payroll, or help with VAT assessment in Devon or Somerset, to draw attention to just some key aspects of business operations in which we have a high level of knowledge.