New data from the Institute of Directors shows the drop in business confidence that was picked up in June has been sustained into July.

The monthly IoD Directors’ Economic Confidence Index, which is the most-timely indicator of UK business sentiment, fell from -6 in May to -31 in June, suggesting a significant deterioration in the business environment. Today’s data for July gives a similar reading of -30 confirming that the deterioration in June was a substantive change rather than a monthly blip.

Kitty Ussher, Chief Economist at the Institute of Directors, said: “Business leaders are feeling a mid-year slump in confidence compared to earlier in the year: the IoD Directors’ Economic Confidence Index has now come in at the relatively low level of around -30 for the second month in a row.

“With inflation proving more persistent than was previously expected, and more firms starting to experience the negative impact of rising interest rates, there is a greater sense of caution in the air than in the Spring. Although our data still suggests economic growth, investment intentions are lower due to increased awareness of external economic risk.”

The IoD Directors’ Economic Confidence Index measures the net positive answers from members of the Institute of Directors to the question ‘How optimistic are you about the wider UK economy over the next 12 months?’ on a five-point scale from ‘very optimistic’ to ‘very pessimistic’.

New data points will continue to be made available on the first day of each month containing data obtained from a survey of IoD members that is in the field during the previous month.