Business leaders deliver bad news for the Chancellor

UK business leaders have provided more bad news for the Chancellor and the Bank of England with the publication of the latest survey by Institute of Directors (IoD).

The institute’s latest quarterly Business Opinion Survey reveals a sharp fall in business optimism and a worrying increase in inflationary pressure.

The proportion of company directors more versus less optimistic about their company’s prospects fell by 17% compared to three months ago.

And there has been a dramatic fall in this balance over the past 12 months.

Meanwhile, the balance of those directors reporting the trend in prices to be up versus down has risen by 12%.

Commenting on the survey results the IoD’s chief economist at the IoD, Graeme Leach, said the sharp fall in overall business optimism is very worrying and points towards a hard landing.

Thankfully, he said, other results in the survey suggest the UK economy can still achieve a soft landing over the 2008-09 period.

He added that the survey suggests that thus far the pressure on the corporate sector for a labour shake-out is muted. Whether this situation will hold is the key uncertainty.