The September IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, has continued its slow crawl upwards but from a very low base, registering a value of –43 for the month of September.

The data was collected between 13th and 29th September. 460 responses were received before the Chancellor’s mini-budget on 23 September and 120 responses were received afterwards. There was no significant difference in the distribution of responses before and after the policy announcements.

Of those that said they were pessimistic about the prospects for the UK economy, when required to choose the main reason for their pessimism, the most popular responses were the rate of inflation in the UK (32%) and political instability in the UK government (21%).

The index of confidence in business leaders’ prospects for their own organisations has fallen back to +20, down from +28 in August. Revenue and employment expectations, while remaining broadly positive, are both tracking downwards. Order books are steadying compared to July, and cost expectations remain extremely high.

In terms of the factors that business leaders say are having a negative impact on their organisation, 54% state UK economic conditions, 46% state global economic conditions, 42% state skills shortages and 37% state the new trading relationship with the EU.

Kitty Ussher, Chief Economist at the Institute of Directors, said:

“Directors’ confidence in the UK macroeconomy has recovered slightly in the last quarter as business leaders come to terms with the impact of the war, but remains weighed down by concerns of high inflation and political instability.

“At the same time, we see a softening in revenue and employment expectations which, while still in positive territory, are tracking downwards. Order books are steady, with roughly as many firms saying that their order books are increasing as decreasing, an unsurprising result for a flatlining economy.

“Interestingly, although businesses are undoubtedly concerned about the market reaction to the mini-budget, overall the net impact on confidence appears to be neutral: we found the same distribution of optimistic and pessimistic responses about the UK economy before and after the statement was made on 23rd September.”