The party enjoyed significant support from business in the run-up and immediate aftermath of the election. However, the IoD’s survey suggests the honeymoon period is already fading as the extent of the Government’s plans becomes clearer.
The IoD’s findings also raised the possibility that the Government could talk the country into a downturn. Bosses have scaled back plans for hiring and investment at the fastest rate since the pandemic over the last month.
Ms Leach said: “As we head into a busy autumn, we are calling on the Government to take time to get policy design right for the long term, and deliver the stable tax and policy framework needed to drive business confidence and investment.
“Further clarity on the industrial strategy and the business tax roadmap, in conjunction with more progress in engaging with business on workers’ rights, would be welcome.”
The IoD said investment intention for the year ahead among its membership had dropped from a reading of +24 in July to +10 in August, in a sign that the Government’s plans are causing businesses to scale back their ambitions.
The proportion of bosses planning to hire more staff in the next year also fell sharply, dropping 14 points from +24 to +10.
The slumps in investment and hiring intentions were the most significant falls since the onset of lockdowns when the pandemic hit in 2020.
More than 30pc of business leaders told the IoD they now feel “quite pessimistic” about the UK economy and 10.1pc said they were “very pessimistic”. While 26.9pc said they were “quite optimistic”, only 1.5pc said they were “very optimistic”.
Ministers have said they will consult both unions and business leaders on workers’ rights changes and the Government has promised to be “pro-worker and pro-business”.
A spokesman for the Department for Business & Trade said: “Our new industrial strategy and International Investment Summit, which will take place within 100 days, will deliver long-term, sustainable, inclusive growth right across the UK by driving investment into our economy. It will play a key role to maintain the highest sustained growth in the G7, increasing opportunities for all.
“Our Make Work Pay plan is designed around creating the right conditions for businesses to support productivity and economic growth and our close engagement with business and civil society is key to finding the balance between improving workers’ rights while supporting the brilliant businesses that pay people’s wages.”