Business confidence plunges in wake of hung parliament - IoD

Business confidence has plunged in the wake of Thursday's general election and subsequent hung parliament amid concerns about the impact of political uncertainty on the UK economy, according to a poll of nearly 700 members of the Institute of Directors.

The poll found that members see no clear way to quickly resolve the political situation, but feel another election this year would be bad for the UK economy. The IoD members who took the survey on Friday said the government's priority must be to reach a new trade deal with the European Union and on the domestic front, to work to deliver a higher skilled workforce and better quality infrastructure.

Stephen Martin, director general of the Institute of Directors, said: "It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could - if not addressed immediately - be disastrous for the UK economy. The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new government.

“It was disheartening that the only reference the Prime Minister made to prosperity in her Downing Street statement was to emphasise the need to share it, rather than create it in the first place. With global headwinds and political uncertainty at the front of business leaders’ minds, it would be wise for this administration to re-emphasise its commitment to a pro-business environment here at home.

“Business leaders will be acutely aware that Parliaments without majorities are more prone to politicking and point-scoring than most. If we do indeed see a minority government, both sides of the aisle must swallow their pride and work on a cross-party basis on the most important issues."

The survey revealed a 34-point negative swing in confidence in the UK economy compared with the last survey in May. While 20% are optimistic about the UK economy over the next 12 months, 57% are either quite or very pessimistic. Still, 59% of respondents said another election later this year would be "somewhat or very unwelcome".