Burnham is ‘not behind’ business confidence bounce
Andy Burnham’s rise to Number 10 is not the reason for a bounce in business confidence, industry leaders have said.
Some analysts have attributed a higher degree of optimism among businesses and consumers in recent months to the “Burnham bounce” and new political direction since Sir Keir Starmer resigned.
But influential lobby group the Institute of Directors has said that Burnham’s return to Westminster has not contributed to the rise in sentiment among businesses.
The industry group, which represents thousands of firms, said its main business confidence reading on the UK economy’s prospects rose from a net score of -63 in July to -49 in August.
However, a separate reading for bosses’ confidence in their own organisations fell by three points to -5 last month.
Anna Leach, chief economist at the IoD, said a small rise in business confidence was “not driven” by Burnham as leaders said that the new Prime Minister and Cabinet “had on balance reduced their optimism regarding both the UK economy and their own organisations”.
“While some appreciated the change in tone and the devolution agenda, the majority were concerned about unfunded spending commitments and the likelihood of further tax increases, with others staying on the fence until post-Budget,” she said.
“Instead, improved confidence appears to reflect better international growth and business resilience.
“We have seen a welcome change in tone from the new Prime Minister, but for the government to deliver on its commitment to good growth in every postcode, it must reduce the cost of doing business.”
Burnham benefits
A separate business confidence survey by Lloyds Bank said optimism was at the highest level since March.
The survey of larger firms also suggested that firms would raise prices by lower levels than previously thought, easing inflation fears.
The Confederation of British Industry echoed readings across the IoD and Lloyds as it said that pessimism in the private sector had faded.
Alpesh Paleja, CBI deputy chief economist, said expectations for growth were the “least negative in two years” although there was a “mixed” outlook for different sectors.
Its research suggested that business and professional services firms were more optimistic than consumer-facing services.