06 Jul 2023
Business confidence dropped significantly in June, according to the latest findings of the Institute of Directors' (IoD) Economic Confidence Index.
The index, which measures business leader optimism for the UK economy, fell to -31 in June 2023, down from -6 in May. This wiped out the improvements recorded since the beginning of the year.
The reasons for the drop are greater concerns around inflation and falling customer demand in the UK.
The index of business leader optimism in prospects for their own firms also fell between May and June, from +44 to +29. Firms are also more wary to commit to investment: net investment intentions fell from +22 in May to +11 in June.
Kitty Ussher, Chief Economist at the IoD, said: 'The surge in optimism and investment 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.
'With business confidence in the economy plummeting, many investment plans that had only recently been dusted down are now being put on hold again as business leaders consider whether the overall business environment is now too risky to be considering expansion.'