British business leaders have turned more pessimistic about the outlook for the country's economy and they are holding back on investment decisions, according to a survey published on Wednesday.
The Institute of Directors' (IoD) confidence index - which maps the gap between business leaders who are optimistic about the economy and those who are pessimistic - fell to -28 in December from -21 in November, having gradually risen since June.
Expectations for business investment, costs and wages, and headcount were all little changed.
Despite the caution, company leaders were more upbeat about prospects for their own businesses with hopes for revenue and export growth rising.
Roger Barker, policy director at the IoD, said sentiment among directors had been largely stuck in the doldrums over the second half of 2023 as the impact of higher interest rates took its toll on the economy.
"Although aspects of the business environment have improved in the last couple of months, particularly with regard to inflation, this is not yet exerting a meaningful impact on business decision-making," Barker said.
The IoD called on the Bank of England to start cutting interest rates in early 2024.
"With inflationary pressures abating, business is in dire need of a boost if it is to help drive meaningful economic growth in 2024," Barker said.
The BoE raised Bank Rate 14 times in a row between December 2021 and August last year, since when it has held its benchmark rate at a 15-year high of 5.25%. Governor Andrew Bailey and other top officials have signalled they want to keep borrowing costs high to ensure inflation pressures are snuffed out.
The IoD survey was based on 703 responses from companies polled between Dec. 14 and Dec. 29.
