By Daniel Hunter

A new opinion poll of business leaders, carried out by the Institute of Directors (IoD), shows a growing sense of economic optimism for the year ahead.

On the fiscal front, support for deficit reduction, and confidence in the Chancellor himself, remains strong.

The poll of 1,369 members of the IoD was carried out between 12 and 20 December 2012. The IoD Policy Voice panel is surveyed quarterly on the economic outlook.

Key Findings

Economic Outlook

Business directors start the year with a far more optimistic outlook on the coming year than 12 months ago. The proportion who expect 2013 to be better than the previous year exceeds those with a pessimistic outlook by a margin of +31%. This is a direct reversal from the start of 2012, when the balance of opinion on the new year was a grim -31%.

Long-term confidence has also risen, with the balance of those expecting higher UK GDP growth over the coming 10 years compared to the previous decade rising to +22% in the new poll, compared to -9% in Q1 2012, -8% in Q2 and +10% in Q3.

A Triple Dip?

The panel's view of the probability of a return to recession has fallen. 16% thought the risk was high, 49% moderate and 34% low. In response to this question at the start of 2012, 35% said the risk was high, 53% moderate and 11% low. Whilst business leaders aren't discounting the risk of a triple-dip, the proportion foreseeing a high risk of recession has fallen from approximately 1 in 3 to 1 in 6.

Fiscal Policy

The Chancellor's approval rating is +11%. This is a long way down from his peak of +54% at the time of the April 2011 Budget, but still higher than the +5% who thought he would do a good job prior to the General Election. Impressively for a mid-term Chancellor in rough seas, he has retained business support overall.

Business leaders remain strongly supportive of deficit reduction; 57% say George Osborne should stick with current policy, 22% say deficit reduction should be tougher,19% support an easing off and only 1% would like to see a reversal of the policy.

"2012 was a tough year, but business leaders expect 2013 to be much better. The risk of a return to recession and a triple dip has not gone away, but it is receding fast, and expectations of growth are rising," Institute of Directors Chief Economist Graeme Leach said.

"George Osborne's approval ratings have suffered, but he retains business support overall. The deficit reduction programme in particular has overwhelming backing from UK directors - the Government absolutely must not waver from the course."

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