UK Business Sentiment Improves in January, Institute of Directors Says

UK Business Confidence Sees Improvement in January, Says IoD

Overview of Business Sentiment in January

LONDON, Feb 2 (Reuters) - British businesses' confidence in the economic outlook has continued to improve from very weak levels, a survey for January showed, extending gains since finance minister Rachel Reeves' November budget imposed fewer immediate tax rises than feared.

The Institute of Directors said on Monday that optimism about prospects for the UK economy remained deep within negative territory, but it rose to -48 in January from -66 in December and was the highest level since last May. It hit an all-time low of -74 in September for the series, which started in 2016.

The upturn matches an improvement in other business surveys including preliminary purchasing managers' index data for January. Final PMI figures are due this week.

Key Findings from the Survey

Businesses' confidence in their own operations also strengthened, rising to +14 from -4 as revenue and export expectations rose to their highest since September 2024 and July 2024 respectively.

Future Expectations and Concerns

Nonetheless, the businesses said they still intended to trim staff numbers and reduce investment, albeit to a lesser extent than before.

"After record weakness last year, January saw a welcome – and fairly chunky – rise in the confidence of business leaders," IoD Chief Economist Anna Leach said.

However she added: "Overall, there's a sense that, while revenues and general conditions have stabilised, businesses are not yet ready to increase either their capital or labour costs materially". 

The IoD survey was conducted from January 16-28 and was based on response from 578 businesses, most of which employed less than 50 staff.

(Reporting by David Milliken, editing by Andy Bruce and Susan Fenton)