Business confidence has plunged because of the political uncertainty gripping the nation following the election, a lobby group has said.
The hung parliament has triggered a “dramatic drop” in confidence, according to a survey by the Institute of Directors (IoD).
A snap poll of its 700 members found a negative swing of 34 points in confidence in the UK economy since its last survey in May.
The majority cited Brexit and growing concerns about the country’s immigration system once Britain leaves the European Union as a priority issue for Theresa May’s minority government to address.
In particular, employers voiced worries about a future talent drain and demanded clarity on the status of EU workers in the UK, coupled with a plan for a higher skilled domestic workforce.
They said they were keen to see quick agreement with the EU on transitional arrangements surrounding the UK’s withdrawal, with a new trade deal an overall priority.
Stephen Martin, director general of the IoD, said if the current political uncertainty was not addressed it would be “disastrous for the UK economy”.
The loss of Mrs May’s Commons majority means her team is in talks with the Democratic Unionist Party to enter into a “confidence and supply” arrangement to keep the Conservatives in power.
Some 69% of business leaders said there was little appetite for a further election later this year and the last thing UK business needed was a “Parliament in paralysis”.
They urged all parties to “swallow their pride and work on a cross-party basis on the most important issues”.
Mr Martin said: “The needs of business and discussion of the economy were largely absent from the campaign, but this crash in confidence shows how urgently that must change in the new Government.
“It was disheartening that the only reference the Prime Minister made to prosperity in her Downing Street statement was to emphasise the need to share it, rather than create it in the first place.
“With global headwinds and political uncertainty at the front of business leaders’ minds, it would be wise for this administration to re-emphasise its commitment to a pro-business environment here at home.”
He added: “Business leaders are keener to see the new Government get to work in Brussels and on the domestic front. Ensuring negotiations start well, and delivering higher quality skills and infrastructure across the country, must be the priority.”
