Bosses confidence in UK economy turns positive

Confidence in the UK economy is reaching its highest point since the Brexit vote. The boost follows what has been described as ‘meaningful progress’ in Brexit negotiations.

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Economic confidence among UK business leaders has risen to its highest level since the government formally triggered the Article 50 process to leave the EU, according to a recent survey.

Increasing confidence in post-Brexit trade

The Institute of Directors (IoD) survey of 700 company directors revealed that post-Brexit trade was not among their main three concerns for the first time since Brexit withdrawal negotiations started a year ago. Now, economic conditions, skills shortages and compliance with government regulations occupy the top spots.Almost half of respondents were confident about prospects for their own companies and there was a narrow balance of one per cent who were expressing confidence in the future of the wider economy.
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Tej Parikh, senior economist at the IoD, said, “After nearly a year of economic pessimism winning out among business leaders, the scales have tipped gently into the positive. “It seems likely that meaningful progress in Brexit negotiations since December has brought some much needed reassurance. “The sensitivity of business leaders to their political environment highlights the imperative for clear communications from policymakers. The wrong signals or lack of engagement can have a real impact on firms’ investment and employment plans. “We urge the government to provide further detail on its proposals for the UK’s future trading and regulatory relationship with the EU, and to iron out its initiatives to narrow the skills gap and enhance business productivity through the Industrial Strategy. “While directors’ economic confidence has edged into positive territory, there’s still plenty keeping them on the fence. Positivity has been held back by rising labour shortages and the burden of complying with government regulations, and this should remind us that Brexit isn’t the only game in town.”

UK economic resilience

Despite the survey – and despite the fact economic output has risen every quarter since the Brexit vote, outstripping estimates by the Treasury and others – many economists believe risks remain, particularly as UK growth is now falling behind that of global rivals.Dan Hanson, from Bloomberg Economics, commented, “The UK’s resilience over the past 18 months, especially in relation to the labour market, has been extremely welcome. But scratching beneath the surface there are questions about how long it will last – households cannot ‘dis-save’ indefinitely and at some point global growth will moderate.“Productivity growth has failed to re-emerge meaningfully over the past decade and until it does, the economy will go nowhere fast. 
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