LONDON: British entrepreneurs' negativity about the economic outlook reduced at ‍the start ‍of 2026, rising to its highest since May ​and extending gains since finance minister Rachel Reeves' November ⁠budget imposed fewer immediate tax rises than feared.

The Institute of ⁠Directors said that ‌optimism about prospects for the UK economy rose to -48 in January from -66 in December, after ⁠touching an all-time low of -74 in September for the series, which started in 2016.

The upturn matches an improvement in other business surveys including preliminary ⁠purchasing managers' index ​data for January. Final PMI figures are due this week.

Businesses' confidence in ‍their own operations also strengthened, rising to +14 from -4 as revenue ​and export expectations rose to their highest since September 2024 and July 2024 respectively.

Nonetheless, the businesses said they still intended to trim staff numbers and reduce investment, albeit to a lesser extent than before.

"Overall, there's a sense that, while revenues and general conditions have stabilised, businesses are not yet ready to increase either their capital ⁠or labour costs materially," IoD Chief ‌Economist Anna Leach said.

The IoD survey was conducted from January 16-28 and was based on response ‌from 578 ⁠businesses, most of which employed less than 50 staff. (Reporting by ⁠David Milliken, editing by Andy Bruce)