UK Directors Blame Political Unrest for Weak Economic Confidence

(Bloomberg) -- British bosses blame political turmoil in Downing Street for dampening confidence in the UK economy.

Most Read from Bloomberg

• Chief Justice Temporarily Stops Release of Trump Tax Returns

• Lottery Winner Keeps $30 Million Jackpot Secret From Wife and Child

• Democrats Prepare for Loss of Congress as Voters Break Late to GOP

• Even More Dry Shampoos Found to Have Cancer-Causing Agent

• China Markets Rally After Unconfirmed Social Posts on Reopening

A survey by the Institute of Directors found that optimism among business leaders plummeted in October back to levels last seen in June, when Boris Johnson was coming under intense pressure to resign as leader of the Conservatives.

He was replaced as Prime Minister by Liz Truss in September, but her administration lasted only seven weeks.

Nearly three-quarters of directors said they were pessimistic about the UK economy last month, almost half of whom cited “political instability in the UK government.” Only 13% said they were optimistic.

The index’s balance of minus 60% is down from minus 43% in September, and has only been recorded at a lower level during the Covid pandemic when it fell to minus 69%.

Kitty Ussher, chief economist at the IoD, said that political instability meant the confidence indicator was “near rock bottom,” but added it could improve with a new ministerial team in place.

Employers have signaled their relief that Truss has been replaced by Rishi Sunak as prime minister, following Jeremy Hunt‘s appointment as chancellor of the Exchequer, with some confidence and stability returning to financial markets.

The IoD said its granular data was more positive, with leaders optimistic about revenue and employment. Some 54% expect sales to be higher in the year ahead, up from 23% in September.

“If macroeconomic confidence improves, then we would expect investment intentions also to rise, even if the headline economic growth rate remains subdued,” Ussher said.

Most Read from Bloomberg Businessweek

• Yeezy Roller Coaster Ended With Two-Minute Phone Call at Adidas

• Fed’s Inflation Fight Is Becoming a Battle Over Jobs, Too

• These Five Women Are Helping Doctors Crack the Long-Covid Mystery

• Can an Election-Denial Alliance Save Republican Senate Hopes in Arizona?

• Basketball’s Top Shrink on How Finding Purpose Lifts Performance

©2022 Bloomberg L.P.