A Cumbrian business leader has admitted to being unsurprised that confidence in the UK economy has taken a further knock due to the impending change in Prime Minister.

According to new survey from the Institute of Directors, optimism in the business climate dropped by 9 per cent to -28% for May into early June – bucking what had been a trend of steadily improving confidence among company directors.

The shift happened at the time when current Prime Minister Theresa May announced that she would be stepping down in July – opening up a fiercely contested leadership contest which sees favourite Boris Johnson and Jeremy Hunt battle for the top job.

And George Beveridge, committee member of the IoD’s Cumbria branch said was not surprised by the latest knock of confidence as uncertainty around the country’s trading relations with the EU continues to grow given the two candidate’s stance on a potential no-deal Brexit.

The downturn in confidence detected by the IoD survey should not be a surprise, given that businesses have been crying out for some certainty and none is yet forthcoming,” he told in-Cumbria.

“Business leaders, including here in Cumbria, have worked incredibly hard over the past three years to protect growth and employment and we see that in a relatively resilient economy thus far.

“We know that the Cumbrian economy is at elevated risk from a potential no deal Brexit and our wonderful tourism sector is particularly concerned about future immigration policies and retaining current EU workers.

“Above all else, businesses need to know what is happening and soon, so they can begin to plan and invest in all our futures.”

According to the research – which gathered the views of 900 company directors across the UK – confidence in the UK economy had been steadily improving since its lowest point in December 2018, where it stood at -38 per cent.

Its confidence metric has now been in the red for 12 months in a row.

It did, however, reveal that business leaders’ confidence in their own firm’s prospects had stayed positive, at 27 per cent, despite their expectations for future investment (7 per cent) and employment (16 per cent) remaining weak.

Other challenges identified included skills shortages and the burden of regulatory compliance.

The IoD’s chief economist, Tej Parikh, said: “Dealing with political uncertainty is part and parcel of leading a business, but this has been taken to extremes over recent years.

With the nature of Brexit still ambiguous and another shakeup of key Government personnel in motion, many businesses have been holding back on investing in their staff, operations and technology to the detriment of UK productivity growth.”

“There is little doubt that the past couple of years have been a maelstrom for firms across the spectrum. It speaks to the underlying strength of the UK’s business leaders and environment that, despite uncertainty, the labour market has continued to confound expectations and exports have been relatively resilient.

“But there is no room for complacency with policy instability and a lack of continuity eating into our long-term competitiveness,” he added.