UK Survey of Executives Finds Confidence at Highest Since 2021

UK businesses entered the general election campaign at their most optimistic in over 2 1/2 years after the economy quickly bounced back from recession, according to the Institute of Directors.

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Published Jun 01, 2024  •  1 minute read

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(Bloomberg) — UK businesses entered the general election campaign at their most optimistic in over 2 1/2 years after the economy quickly bounced back from recession, according to the Institute of Directors.

The business lobby group said “green shoots” of recovery are “clearly visible” after its economic confidence index rose to minus 3 in May. It was up from minus 10 the previous month and the highest since September 2021 just after the economy emerged from 

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Prime Minister Rishi Sunak is claiming that the economy has turned the corner as the campaign for the July 4 vote gets under way. Britain returned to growth in the first quarter following a mild recession last year and inflation has fallen sharply to just above the 2% target. 

However, the ruling Conservative Party remains well behind Labour in opinion polls after its economic credibility was hit by the worst cost-of-living crisis in decades and the market turmoil of Liz Truss’s brief premiership.

Business sentiment has moved into a “neutral phase” after being relatively pessimistic for much of last year, said Roger Barker, director of policy at the IOD. “Green shoots are clearly visible, and the direction of travel is positive.”

The survey, conducted between May 14 and May 29, partially captures the views of firms since the election was called on May 22. While the IoD’s headline gauge is still in negative territory, it has only briefly been positive since the Brexit referendum almost eight years ago.

The survey also found that investment and hiring intentions rose in May, and fewer firms were worried about energy costs. However, businesses still cited domestic economic conditions and labor shortages as their biggest concerns.

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