U.K. business confidence has slumped after June 8 elections left the Conservative government depending on the support of a minor party to stay in power, a survey of 700 members of the Institute of Directors showed June 12.
Confidence in the U.K. economy tumbled 34 points from last month, leaving 57% of respondents either quite or very pessimistic about the economy over the next 12 months, compared to only 20% optimistic -- a balance of -37 percentage points, the institute said.
About 65% of respondents thought uncertainty due to the hung parliament was "a significant concern" for the U.K. economy, while 27% described it as a "slight concern". The percentage optimistic about the future of their own organizations was 17 points higher than those who were pessimistic, down from a positive balance of 36 percentage points the month before.
Asked to prioritize three policy areas for the new government, 72% opted for striking a new trade deal with the EU. Another 49% chose education and training, and 35% opted for modernizing infrastructure.
"It is hard to overstate what a dramatic impact the current political uncertainty is having on business leaders, and the consequences could – if not addressed immediately – be disastrous for the U.K. economy," the institute's director general, Stephen Martin said. "Saying this, there is also little appetite for a further election this year, and indeed business leaders are keener to see the new Government get to work in Brussels and on the domestic front."