Hurrah! Economic confidence turns positive for first time in a year

Business leaders’ confidence in the economy has returned to positive territory for the first time in almost a year, a new survey from the Institute of Directors reveals today.

In a poll of 700 company directors conducted in March, optimism about the UK’s economy came in higher than at any time since Theresa May triggered Article 50 last March. The latest rise in confidence follows an earlier jump after December’s announcement that sufficient progress had been made in the first phase of the Brexit talks.

For the first time since withdrawal negotiations began, the UK’s uncertain trading status with the EU has fallen out of the top three concerns of business leaders.  Economic conditions, skills shortages and compliance with government regulation now occupy the top spots.

While optimism about the wider economy remained low at just 1%, bosses’ confidence in their own companies is much higher at 47%.

Tej Parikh, Senior Economist at the Institute of Directors, said: “After nearly a year of economic pessimism winning out among business leaders, the scales have tipped gently into the positive. It seems likely that meaningful progress in Brexit negotiations since December has brought some much needed reassurance.

“The sensitivity of business leaders to their political environment highlights the imperative for clear communications from policymakers. The wrong signals or lack of engagement can have a real impact on firms’ investment and employment plans. We urge the Government to provide further detail on its proposals for the UK’s future trading and regulatory relationship with the EU, and to iron out its initiatives to narrow the skills gap and enhance business productivity through the Industrial Strategy.

“While directors’ economic confidence has edged into positive territory, there’s still plenty keeping them on the fence. Positivity has been held back by rising labour shortages and the burden of complying with government regulations, and this should remind us that Brexit isn’t the only game in town.”