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Business optimism crushed as UK economy slows

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The economy has reached its peak according to the results of the latest Institute of Directors (IoD) Business Opinion Survey.

Optimism among pollsters had dipped to 31% a fall from 40% when views were last tested.

Although in a ray of light 67% reported that overall their company was performing well over those who said things were going badly, a slip, however of 72% on the previous results.

Graeme Leach, Chief Economist at the IoD said:

“It’s too early to be certain, but our latest Business Opinion Survey does suggest the UK economy is now at a turning point. Our members seem to be signalling that this is as good as it gets in the current economic cycle.

“Company optimism and performance have declined, but they remain relatively high compared with recent years. The upshot is, the UK economy faces a slowdown, but not a downturn.”

Business investment is also expected to slow. The investment intentions balance fell to 17% in the latest survey, from 27% previously. Investment intentions have fallen back to the levels seen a year ago.

Talking to HRZone on what this means to HR professionals, John Philpott Chief Economist at professional body the Chartered Institute of Personnel and Development (CIPD) said:

“The IOD Business Opinion Survey confirms what the CIPD expects to see in the coming months – a mild drop in the pace of economic growth as higher interest rates and a more subdued housing market depress consumer spending.

“However, while this will eventually limit the pace of job creation, unemployment will remain low. HR professionals will therefore continue to experience tough competition in a tight labour market and ongoing recruitment and retention difficulties.”

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Annie Hayes

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