Pessimism about the economy is “on the retreat” as business confidence returns and mortgage lending recovers.
In an upbeat survey published today, the Institute of Directors (IoD) said its economic confidence index is at its highest level since May last year.
Bosses in Britain are calling on the Bank of England to cut interest rates from the current 16-year high of 5.25 percent to boost the recovery.
However, they are likely to be disappointed next week as the Bank is set to leave rates unchanged until later in the year.
The call for rate cuts came as separate Bank figures showed lenders approved 61,325 mortgages in March, up from 60,497 in February and the highest total since September 2022.
Green shoot: In an upbeat survey, the Institute of Directors said its economic confidence index is at its highest level since May last year
However, there are fears that further delays in reducing rates could derail the recovery of the property market, as well as the broader economy.
Lenders including Nationwide, Santander and Natwest have raised mortgage rates in recent days, dealing a blow to households hoping for cheaper loans.
Roger Barker, policy director at the IoD, said: “It remains true that business leaders are generally pessimistic about the UK’s economic prospects.
‘However, since March, the pessimists are retreating. Confidence has been increasing and is now within striking distance of a more neutral outlook.
“However, a major obstacle to improving business confidence is the current high level of UK interest rates.”
He added: “Business leaders will seek a significant change in the Bank of England’s monetary stance before they can accept a more optimistic economic outlook.”
Peter Arnold, chief economist at consultancy EY UK, said: ‘The recovery in mortgage demand continued in March.
“However, rising mortgage interest rates in recent months appear to have taken some of the momentum out of the recovery.”
