Business leaders' confidence in UK economy slumps dramatically after general election

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A poll of almost 700 business leaders conducted in the immediate aftermath of last week’s general election reveals a dramatic drop in business confidence and major concerns relating to political uncertainty.

The survey, conducted by the Institute of Directors (IoD), shows that 65 per cent of leaders questioned believe uncertainty over the make-up of the Government is ‘a significant concern’ for the UK economy. A further 27 per cent think of it as a ‘slight concern’.

Since May, there has been a negative drop of 34 points in confidence in the UK economy, the IoD said. Although 20 per cent are still optimistic about the UK economy over the next 12 months, some 57 per cent are now either quite or very pessimistic. Last month, 34 per cent registered their optimism and only 37 per cent reported pessimism.

“It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could – if not addressed immediately – be disastrous for the UK economy,” said Stephen Martin, director general of the IoD.

“The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new Government.”

He said it is “disheartening that the only reference the Prime Minister made to prosperity in her Downing Street statement [on Friday] was to emphasise the need to share it, rather than create it in the first place”.

“With global headwinds and political uncertainty at the front of business leaders’ minds, it would be wise for this administration to re-emphasise its commitment to a pro-business environment here at home.”

He also said that there is little appetite among members of the IoD for a further election this year.

“Business leaders are keener to see the new Government get to work in Brussels and on the domestic front,” said Mr Martin.

“Ensuring negotiations start well, and delivering higher quality skills and infrastructure across the country, must be the priority.”

The survey asked the respondents to name three areas of Brexit negotiations which should be prioritised by the new Government. A total of 58 per cent cited an agreement on rights and entitlements for EU citizens in the UK and vice versa.

Negotiating an early agreement on transitional arrangements and securing ‘zero for zero’ tariffs were the joint-second most popular answer, given by 38 per cent of business leaders.

On the subject of transitional arrangements, 86 per cent said that striking a deal on that issue was “somewhat” or “very” important.