Business Confidence in the UK Falls to Lowest Level Since the Pandemic

Forex - In the UK, the government is being accused of shaking the foundations of the economy with its autumn budget, as business confidence has fallen to its lowest level since the early months of the Covid-19 pandemic. The economic confidence index from the Institute of Directors, which measures business leaders' optimism regarding expectations for the UK economy, has declined from -52 in October to -65 in November, marking the fourth consecutive monthly decrease. This is the lowest level since the record low of -69 in April 2020 and the second worst value since the index began in July 2016.

Business leaders' confidence in their own organizations has also dropped from +2 in October to -7 in November, reaching its lowest level since May 2020 (-8). Anna Leach, the chief economist of the Institute of Directors (IoD), warned that the scale of the tax increases in the budget will undermine growth and ultimately public finances by hitting the private sector hard.

Leach stated, "As businesses continue to digest the effects of the budget on their business plans, confidence keeps falling and is approaching the lows seen at the beginning of the Covid pandemic. The budget has weakened, rather than rectified, the foundations and harmed the private sector's ability to invest in their businesses and workforce."

Investment expectations have fallen from -15 in October to -27, reaching the lowest level since May 2020 (-43); expectations for workforce numbers have dropped from -4 in October to -24 in November, the lowest since May 2020 (-33). Export expectations have decreased from +6 in October to +2 in November, marking the lowest level since April 2023. Revenue expectations have declined from +15 in October to +4 in November, the lowest since October 2020 (-8). Wage expectations have fallen from +47 in October to +21 in November, the lowest level since November 2020 (+19).