A new poll by the Institute of Directors shows that most business leaders are cautiously optimistic about 2017, although there are concerns about the impact of Brexit and the skills shortage.

More than 60% of IoD members - most of which are SMEs - are optimistic or very optimistic about their prospects in 2017; and the net optimism against pessimism figure (+50%) is the highest it has been since the vote to leave the European Union in June 2016.

Despite the fact that IoD members are less bullish about the wider UK economy, they remain optimistic and the net rating of +14% is significantly higher than October's figure of -20%.

The poll found that 60% of respondents expect to increase revenues in 2017 against 15% expecting them to fall. There are also notable improvements since the last survey in the number of firms looking to invest and increase headcount.

On a more pessimistic note, half of those business leaders surveyed said that current UK economic conditions are having a negative effect on business growth and 45% felt the UK's uncertain trading status with the EU is holding them back. Four in ten complained of a skills shortage. If revenues are squeezed, more than a third would consider reducing headcount (38%) or postponing planned investment (40%).

Simon Walker, IoD director general, said: "Businesses are becoming used to uncertainty, and while some speculate on what our relationship with Europe might look like in the years to come, employers are getting on with the job of growing their businesses and delivering jobs for the UK."

However, James Sproule, IoD chief economist, said: "Confidence is a funny thing, and it can't be taken for granted - a misjudged speech or signs that we aren't making progress in Brussels could signal a sudden downturn. The Budget in March remains a vital moment for this Government and the economy as a whole. Encouraging firms to invest must remain top of the agenda."

Also this week, the latest quarterly economic survey from the British Chambers of Commerce (BCC) shows that the upturn in Q3 in the manufacturing sector has been sustained in the final quarter of 2016; in addition, more service sector firms are expecting growth than they were just after the EU referendum.

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