Confidence in the economy among directors has fallen to its lowest point in 2018, according to the findings of a new survey by the IoD.
Businesses were asked how optimistic they are about the wider UK economy over the next 12 months and the results show that optimism is at -16% - down from 3% in April.
However, 37% of respondents said they were confident about prospects for their own organisation. Even so, the findings show that firms' expectations for future investment and employment remain subdued and most business directors anticipate rising costs for the year ahead.
The survey showed that the main factors that are having a negative impact on businesses are:
- UK economic conditions (47%);
- Uncertain trading status with the EU (44%);
- Skills shortages (41%);
- Government regulation (41%);
- Business taxes (30%);
- Late payment (28%);
- Broadband cost, speed and reliability (28%);
- Employment taxes (28%);
- Transport cost and reliability (25%);
- Global economic conditions (24%);
- Access to, or cost of, finance (15%);
- The cost of energy (15%).
"Despite cautious optimism emerging amongst the business community earlier in the year, any momentum appears to have dwindled," said Tej Parikh, IoD senior economist. "In terms of directors' outlook for the economy, we're heading back to the levels of pessimism we saw before progress was made on phase one of Brexit talks.
"But Brexit isn't the only burning matter for British businesses. The downbeat mood is endemic across organisations of all shapes and sizes … larger businesses in particular have been buffeted by a variety of fresh headwinds, from oil price rises to the prospect of a trade war. Meanwhile smaller enterprises, the backbone of the economy, are suffering under the weight of high costs, skills shortages and weak productivity."
He added: "It's unfortunate that the Brexit process has limited the bandwidth of Government to meet equally pressing domestic economic challenges - that needs to change sooner rather than later."