Directors of companies across the UK have put their investment and hiring plans largely on hold as they look to ride out the COVID-19 crisis.
According to the Institute for Directors (IoD), there was a slight increase in general confidence among company bosses in May but that was from a position of record lows in April as the coronavirus pandemic gripped so much of the global economy.
On investment and hiring, company directors polled in May were less positive than has ever previously been recorded, with optimism about a swift economic recovery apparently in short supply.
Reflecting on the latest figures, the IoD’s chief economist Tej Parikh said that many companies are confident they can “ride out the storm” but are rather less optimistic about their ability to “go anywhere fast once it ends”.
“It’s too early to say we’ve turned a corner,” Mr Parikh said, despite overall confidence in the UK economy having risen by the IoD’s measures from -69 to -60 from April to May.
An array of challenges clearly face companies across the country in the coming months, with the policies pursued by government likely to have a very significant impact in determining how the economy looks later this year and next.
The IoD has called on the government to “pull out all the stops this summer” in terms of finding ways to stimulate economic growth and support both employment and businesses in emerging from the COVID crisis.
“If it holds back too much ammo for later in the year, firms’ recovery will be slowed,” Mr Parikh says.
“With cash tight, smaller firms could also benefit from tax breaks to adjust to the new normal, while the debt businesses have built up will hold back the economy unless it’s addressed.”
In recent days, the Organisation for Economic Co-operation and Development (OECD) warned that the UK could be among the countries most badly impacted economically by the coronavirus.
The organisation’s current estimates are that the UK economy will shrink by around 11.5 per cent over the course of 2020, which could potentially be closer to a contraction of 14 per cent if there is a second spike in the COVID pandemic.