IoD: Business leaders remain frustrated with Reeves
UK business leaders are less optimistic about wage growth and cost expectations remain high, a new survey has suggested, in signs that Chancellor Reeves will continue to face a “strong sense of frustration” from company bosses.
The Labour government could yet offer businesses olive branches as it rolls out its industrial strategy and spending review in the summer.
But British executives remain pessimistic about their business prospects despite a modest improvement in April, according to research conducted by the Institute of Directors (IoD).
Its economic confidence index crept up by seven points compared to March while headcount expectations saw its first positive reading in more than six months.
But business leaders are still feeling bruised from Reeves’ £25bn tax raid on employers and hike to the national living wage, which both came into effect this month, as cost expectations remained high.
The survey of nearly 650 executives also found that a minority of firms were planning higher investments in the next 12 months.
Anna Leach, chief economist at the IoD, said there was a small improvement in confidence in April but uncertainty around US tariffs was one of the most “prominent” areas of concern.
Leach also said that directors surveyed were not moved by Reeves’ desire to deliver growth “further and faster”.
“There’s a strong sense of frustration amongst business leaders that the government has been quick to raise their costs, but slow to deliver policies which will support them to grow their businesses,” Leach said.
The government has begun streamlining various public bodies in a bid to ease regulations on firms.
The Payment Systems Regulator (PSR) has been folded into the Financial Conduct Authority (FCA), which has begun tearing out hundreds of pages from its giant handbook of rules.
The Competition and Markets Authority (CMA) has also seen changes as its former head Marcus Bokkerink was replaced with former Amazon UK boss Doug Gurr.
Leach suggested the government had to move faster on pro-growth policies.
“The government is right to focus on public sector efficiency, but this needs to improve the pace of growth-friendly policy delivery as well as deliver value for money.
“Businesses would welcome quicker progress on the de-regulatory drive as well as actions to address other barriers to growth – including energy and employment costs – which would free up resources to invest and grow.”