Business leaders' confidence in the economy rose significantly in January, according to the Institute of Directors (IoD).

While the IoD's Directors' economic confidence index hit a low of -58 in December 2022, the beginning of 2023 saw business leader optimism in the economy increase to -28 - the highest level recorded since March last year.

Directors' confidence in their own companies' prospects also increased from +24 in December to +37 in January.

According to the IoD's chief economist Kitty Ussher, the increase in economic confidence can be attributed to improved political stability and reduced concerns about inflation.

However, while 24% of directors believe that inflation has already peaked - up from 10% in December - 40% do not expect it to peak until this summer.

Furthermore, expectations in terms of revenue, cost and investment intentions for the next year remained relatively low. While 27% of IoD members plan to increase investment in the next year, 25% plan to decrease it.

Commenting on the figures, Ussher said:

"The Government needs to do more to sharpen investment incentives in capital, people and net zero in the forthcoming Budget to get our economy back on to a firm path towards growth."

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