IoD: New Year uptick in economic confidence recedes in February

New data from the Institute of Directors shows that business confidence in the wider economy has dropped back to the levels seen in the latter part of 2023, having seen a brief uplift at the start of this year. Whilst business leaders’ views about their own organisations’ prospects remain more positive, investment and export expectations for the year ahead have dampened over the last couple of months.

The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, fell to -25 in February 2024, wiping out the gain it experienced in January (-14) and back to the levels seen at the beginning of Q4 2023.

Other indicators from February’s survey include:

  • The index of business leader optimism for the future of their own organisation held at +37 in February, broadly in line with the levels experienced in January (+38) and December 2023 (+36).
  • Net investment intentions fell to +13 in February, back from +20 in January and +23 in December
  • Net export expectations have reduced to +14 in February, down from +16 in January and +20 in December.
  • Other than UK economic conditions (66%), business leaders list skills shortages (44%) and the cost of energy (35%) as the leading factors having a negative impact on their organisation.

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

“Following a New Year uptick in economic confidence, directors’ optimism has now receded to the kind of levels that we saw for much of the second half of 2023.

“Whilst we are continuing to see a more positive outlook with regards to their own organisations, it is worrying to see that investment and export intentions for the year ahead have both been in reverse over the last couple of months.

“Business leaders will be looking to the Chancellor’s Budget statement next week to offer some measures to get the economy feeling more hopeful and support business investment, both in physical capital as well as human capital to address ongoing skills shortages.”A graph with red linesDescription automatically generated

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’.