Confidence Index is at its lowest level since October 2020 as expectations of inflation continue to rise
The Institute of Directors’ Economic Confidence Index collapsed from -4 in February 2022 to -34 in March 2022, the lowest level since October 2020.
Over half (53%) of UK business leaders say that the cost of energy is exerting a negative impact on their organisation, three times as many as a year ago (14% in March 2021).
Confidence among business leaders in the prospects for their own organisation has also fallen sharply from a net positive score of +39% in February to +23% in March.
Expectations of inflation continue to rise, with over half (51%) of business leaders expecting annual inflation to be running at higher than 6% by the end of 2022, up from 18% as recently as January.
Kitty Ussher, chief economist at the Institute of Directors, said: “Business has experienced a dramatic collapse in confidence following the invasion of Ukraine, leading to many firms putting investment plans on hold.
“The reality of higher energy and commodity prices, plus the hike in employment taxes, all overlaid with a general climate of deep uncertainty, is now having a real economic impact.
“The Chancellor has said he will look again at tax incentives for business investment over the next few months. That work has now become even more urgent.”