Company directors’
confidence improved slightly in May from
a record low the month before, but investment
and hiring intentions plumbed new depths, the
latest edition of the Institute of Directors’ Confidence
Tracker reveals today
[Thursday].
-
Business leaders’ overall confidence in the
economy increased from -69 in April to
-60 in May, while the outlook for their
own firms also improved, from -22 to -7. Both indicators
remain in pessimistic territory and at their second-lowest
readings on record.
-
Directors’ investment intentions for the next 12
months fell a further 11 percentage points from April, to its
lowest on record. Hiring intentions also reached a
new record low.
-
The bulk of firms expected their revenue to be lower in
the year ahead, while wages were also expected to fall.
In light of the figures, the IoD called on Government to
take action in the summer to kickstart investment and
support employment as the furlough scheme draws to a
close.
The IoD is recommending policies
including:
· A
'Recovery Grant' scheme for firms still waiting for support or
adjusting their workplaces.
· An increase in the Employment Allowance.
· Greater
tax incentives for firms to invest in technology, training
and in adapting their business models.
· Measures
to ease the burden of business debt, such as ‘student loans’ for small
firms.
Read
the IoD’s latest Confidence Tracker
here.
Data are based on monthly surveys with members. The number
of respondents vary between 700-1100. The latest survey was
conducted between 20-29 May, with 720 respondents.
Tej Parikh, Chief Economist at the Institute of
Directors, said:
“It’s too early to say we’ve turned the corner. While more
firms might feel they will be able to ride out the storm, many
will struggle to go anywhere fast once it ends.
“Revenue isn’t expected to pick up, which means
investment and hiring plans are very much on hold. The Government
must pull out the stops this summer. If it holds back too much
ammo for later in the year, firms’ recoveries will be
slowed.
"When the furlough scheme ends, employment could take a
hit. The Government should help companies fill the gap by
reducing the cost of hiring. With cash tight, smaller firms could
also benefit from tax breaks to adjust to the new normal, while
the debt businesses have built up will hold back the economy
unless it's addressed."
