The IoD’s Directors’ Economic Confidence Index remained unchanged at –6 in November 2021. This means that slightly more business leaders are negative than positive about future prospects for the UK economy, but the situation has stabilised following sharp falls in the early autumn.

Investment intentions have fallen slightly from a net score of +22 in October to +18 in November. Indicators for future revenue and employment are also lower than the previous month, but expectations of costs (including wages) are slightly higher. An increasing number of respondents are also citing ‘cost of energy’ and ‘employment taxes’ as having a negative impact on their organisation, but the negative effect of the pandemic on firms is declining, albeit from a high base.

Nearly half (45%) of members expect inflation to be running at higher than 4% by this time next year, an 8 percentage point increase from last month (37%).

Business leaders who were not planning to raise levels of business investment were asked what single thing would cause them to change their mind. The single most popular answer was ‘stronger growth prospects for the UK economy’ (34%).

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

“The economy is now in a Catch-22 position: growth into 2022 depends critically on private sector investment, but many business leaders are nervous about committing that investment when the UK economic outlook remains uncertain.

“On the plus side, our economic confidence index stopped its fall in November, but with concerns around inflation, high energy prices, continuing staff shortages and the forthcoming rise in employers’ NICs, the mood music is not yet sufficiently cheerful to reverse the decline of previous months. Looking into December, businesses will be carefully considering the implications of the Omicron variant and we expect this to be reflected in the responses to our next monthly survey.”