Directors remain pessimistic but some green shoots

The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, remained subdued at -25 in October 2023, similar to September’s reading of -26. This is the fifth consecutive month in which economic confidence has been relatively low, following a large drop in June.

However, there were some more encouraging signs in other indicators from October’s survey:

  • The index of business leader optimism for the future of their own organisation rose to +37 in October, up from +33 in September.
  • There was a noticeable jump in net revenue expectations, up to +46 in October compared to +38 in September.
  • Net investment expectations also rose, to +23 in October from +13 in September.
  • The longer-term growth ambitions for business are more favourable than it was this time last year, with 69% of business leaders stating that they have plans for growth compared to only 62% a year ago.

Dr. Roger Barker, Director of Policy at the Institute of Directors, said:

“On the face of it, business confidence is pretty much unchanged from last month. Business leaders appear to be stuck in a moderately pessimistic mood in terms of their outlook for the economy.

“However, under the surface, there are some encouraging signs. Some businesses are becoming more sanguine about the prospects for their own organisations, both in terms of revenue and investment intentions.

“Whether these green shoots consolidate into a definite trend will probably only come clear after the Autumn Statement later this month – when the government will provide us with a clearer picture of its pre-election tax and spending intentions.”

Directors' Economic Confidence Index - Oct '23

The IoD Directors’ Economic Confidence Index measures the net positive answers from members of the Institute of Directors to the question ‘How optimistic are you about the wider UK economy over the next 12 months?’ on a five-point scale from ‘very optimistic’ to ‘very pessimistic’.

New data points will continue to be made available on the first day of each month containing data obtained from a survey of IoD members that is in the field during the previous month.


Full survey results

768 responses from across the UK, conducted between 12-29 October 2023. 15% ran large businesses (250+ people), 18% medium (50-249), 22% small (10-49 people), 32% micro (2-9 people) and 13% sole trader and self-employed business entities (0-1 people).

How optimistic are you about both the wider UK economy and also your organisation over the next 12 months?

Very optimistic Quite optimistic Neither optimistic nor pessimistic Quite pessimistic Very pessimistic Don’t know
Wider UK economy 2.2% 19.9% 30.5% 36.6% 10.5% 0.3%
Your (primary) organisation 10.3% 42.2% 32.0% 12.1% 3.1% 0.3%

Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:

Business investment Cost Exports Headcount Revenue Wages
Much higher 7.0% 10.3% 3.9% 3.5% 10.5% 7.4%
Somewhat higher 34.0% 67.2% 18.0% 34.6% 50.5% 65.5%
No change 39.2% 15.4% 32.2% 48.0% 22.1% 21.9%
Somewhat lower 13.0% 5.1% 3.4% 9.9% 12.4% 2.0%
Much lower 4.7% 0.5% 2.2% 1.7% 3.0% 0.7%
N/A 1.7% 1.0% 39.5% 1.6% 1.0% 2.2%
Don’t know 0.4% 0.5% 0.9% 0.7% 0.4% 0.4%

How ambitious for growth would you say your organisation is at the moment? Choose the option that best represents your view.

We have ambitious plans to scale up fast 21.0%
We have plans for steady growth 48.3%
We are happy to remain stable at the current level of business 13.9%
We are consolidating activity and focusing on our core offering 8.7%
We are cutting costs in a difficult trading environment 5.7%
We do not have a view 1.7%
Don’t know 0.7%