IoD: Tentative signs of economic green shoots as business confidence rises

The latest data from the Institute of Directors shows that business confidence in the UK economy took a significant leap forward in March. Bouncing back from the unexpectedly low confidence levels recorded in February, the key indicators suggest business leaders are returning to the more optimistic positions that they held in January.

The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, rose to -12 in March 2024, having dropped back to -25 in February from -14 in January.

Other indicators from March’s survey also showed increased optimism in the prospects for the UK economy:

  • The index of business leader optimism for the future of their own organisation rose to +42 in March, up from +37 in February.
  • Net investment intentions for the year ahead rose, from +13 in February to +18 in March.
  • Net revenue expectations rose from +38 to +44.
  • Net wages expectations reduced from +59 to +55.
  • Businesses’ order books, last polled in September 2023 at +14, have returned to the position that they were in March 2023 (+28).

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

“Business confidence has bumped up and down during the last few months, struggling to assert a strong trend in either a positive or negative direction. However, March’s figures provide at least some grounds for greater economic optimism.

“Although it would be premature to claim that the economy has definitively turned the corner, as recently asserted by the Prime Minister, our latest poll figures do argue in favour of some emerging green shoots.

“Business leaders are anticipating higher revenue and investment levels over the next 12 months. Furthermore, although they remain on balance slightly pessimistic about the outlook for the economy as a whole, directors are much more hopeful concerning the prospects for their own organisations.”

Directors' Economic Confidence Index

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’.


Full survey results

687 responses from across the UK, conducted between 14-28 March 2024. 15% ran large businesses (250+ people), 21% medium (50-249), 21% small (10-49 people), 31% micro (2-9 people) and 12% 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 2.3% 25.8% 31.4% 31.9% 8.4% 0.1%
Your (primary) organisation 9.2% 47.0% 29.0% 12.1% 2.2% 0.6%

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

Much higher Somewhat higher No change Somewhat lower Much lower N/A Don’t know
Business investment 4.2% 33.2% 40.3% 13.4% 6.3% 2.0% 0.6%
Costs 13.0% 65.8% 15.6% 3.8% 0.4% 1.0% 0.4%
Exports 2.9% 18.6% 29.5% 3.3% 1.9% 43.1% 0.6%
Headcount 1.6% 32.8% 49.1% 11.9% 2.9% 1.5% 0.3%
Revenue 7.1% 53.7% 20.2% 12.4% 4.4% 1.5% 0.7%
Wages 4.1% 56.3% 32.5% 3.9% 1.3% 1.7% 0.1%

This question is about how demand for your organisation’s product or services has changed in the last three months; that is, since the end of last year. You might think of this as your order book, your work pipeline, sales volumes or the level of activity. Do you think demand for your organisation’s products or services has got stronger or weaker in the last three months, or has there been no change?

Much stronger 10.3%
A bit stronger 39.2%
No change 28.2%
A bit weaker 14.3%
Much weaker 7.0%
Don’t know 1.0%