IoD says business leaders find reasons to be more optimistic in 2024
Against a somewhat mercurial political background in the early stages of 2024, the IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, leapt upwards to -14 in January 2024, up from -28 in December 2023.
This represents the Index’s highest value since May 2023 (-6) and the biggest jump in a single month (+14) since this time last year (+30).
The index of business leader optimism for the future of their own organisation also rose to +38 in January, from +36 recorded in December.
Whilst expectations regarding costs increased to +80 in January from +74 in December, there was a significant reduction in wage expectations from +69 to +56.
Expectations in terms of revenue, headcount, exports and investment intentions for the next 12 months remained broadly similar to December.
Dr. Roger Barker, Director of Policy at the Institute of Directors, said: “Directors have maintained a positive outlook for their own organisations for some time.
“However, throughout the second half of last year, such optimism did not extend to the UK economy as a whole.
“The New Year has finally seen directors regain a more sanguine perspective. Although they remain, on balance, moderately pessimistic about the UK’s economic prospects over the next 12 months, their sentiment is shifting towards a more positive outlook.
“This gives policy makers something to build on.
“In order to sustain this encouraging momentum, the government should aim for a Budget on 6 March which maintains economic stability and encourages business investment.
“An early interest rate cut from the Bank of England would also do much to underpin a return to business optimism.”
The IoD Directors’ Economic Confidence Index measures the net positive answers from members of the Institute of Directors to the question ‘How optimistic are you about the wider UK economy over the next 12 months?’ on a five-point scale from ‘very optimistic’ to ‘very pessimistic’.
New data points will continue to be made available on the first day of each month containing data obtained from a survey of IoD members that is in the field during the previous month.
Full survey results.
671 responses from across the UK, conducted between 15-29 January 2024. 16% ran large businesses (250+ people), 17% medium (50-249), 20% small (10-49 people), 32% micro (2-9 people) and 15% sole trader and self-employed business entities (0-1 people).
| Very optimistic | Quite optimistic | Neither optimistic nor pessimistic | Quite pessimistic | Very pessimistic | Don’t know | |
| Wider UK economy | 1.9% | 24.9% | 32.8% | 33.5% | 6.9% | 0.0% |
| Your (primary) organisation | 6.3% | 47.1% | 30.4% | 13.6% | 1.9% | 0.7% |
| Much higher | Somewhat higher | No change | Somewhat lower | Much lower | Don’t know | N/A | |
| Business investment | 4.2% | 31.7% | 45.5% | 11.5% | 4.2% | 0.4% | 2.5% |
| Costs | 14.3% | 68.1% | 13.4% | 2.4% | 0.1% | 0.4% | 1.2% |
| Exports | 3.6% | 16.7% | 33.1% | 3.4% | 1.0% | 0.4% | 41.7% |
| Headcount | 1.8% | 31.0% | 52.0% | 10.4% | 2.1% | 0.0% | 2.7% |
| Revenue | 6.0% | 50.1% | 26.4% | 13.7% | 1.8% | 0.4% | 1.6% |
| Wages | 4.9% | 54.2% | 34.9% | 2.7% | 0.6% | 0.1% | 2.5% |
