The firms have become optimistic with regards to their economic outlook. Its key confidence measure rose into the positive territory of 21% in December 2018 from a negative territory of -18% in November.
Currently, the aforestated is the highest figure since the 2016 EU referendum. In accordance with the Institute of Directors (IoD), it was added that Boris Johnson’s new majority government meant company directors in spite of their personal views. This was concluded through voting from the members in the days following the election. In addition, it now has a framework around which they can put in place the plans to invest, hire staff and expand.
The IoD’s net balance of the optimistic firms subtracted by the pessimistic firms is the measurement of IoD’s main confidence. Also, note that it has been negative for 1 year and 6 months.
However, due to the uncertainty that surrounds the UK’s long term relationship with Europe, the organisation is giving a warning for the reason that it remains to be a cause for concern, adding: “Our members’ confidence has proven sensitive to Brexit developments over the past few years, and this is likely to continue during negotiations in the year ahead.”
Larger business directors tend to be more optimistic with regard to the prospects of the economy for the next 12 months. In accordance with the data, the company directors have become more confident about their own firms’ prospects. This figure increased to 46% from 26% from the previous month.
The confidence that was gained was accompanied by a “significant” increase in firms’ investment intentions for 2020. A net balance of 18% expects their investment levels to increase, though the bulk of those quizzed is also expected to be hit with higher costs over the next 12 months. The directors’ body said this indicated that the new government “has its work cut out” to support the labour market and cut firms’ mounting bills.
The current state of the economy was named the top challenge, followed by continued uncertainty around the UK’s future relationship with the EU.
Tej Parikh, the chief economist at the IoD, said: “Britain’s directors will be entering 2020 with a little more festive cheer than might have been expected only a few weeks ago.”
In addition, he stated that the government’s agenda as outlined so far included some welcome proposals. This includes plans to increase and broaden research and development tax credits.
Proposals outlined in the Queen’s speech on 19 December to reform business rates were also highlighted in the statement. Some firms should have their business rates divided into two with the government committing to increase the so-called business rate “retail discount” from one-third to 50%. This will extend to cinemas and music venues, and introducing an additional discount for pubs.
The reforms and reliefs announced since 2016 would reduce the burden of business rates by more than £13bn for the next 5 years. This was what the government claimed in the Queen’s speech. The IoD findings are based on a poll of 952 company directors that are carried out between December and 13 and December 20.
Shadrach is a Trending Journalist. His first job was as a newsreader and journalist at an award winning magazine. He spends most of his time scouring the internet for the hottest topics to share with his readers.