(Bloomberg) -- U.K. directors are the least optimistic about the economy since the height of the winter lockdown after confidence “fell off a cliff” in September, a business lobby warned.

With energy and tax bills spiking, a fuel crisis biting and government support for workers being withdrawn, people running small and medium-sized businesses are broadly negative about the economic outlook for the first time since February, according to an Institute of Directors survey released Thursday. That’s in contrast to a surge in confidence during the summer.

Three-quarters of directors are bracing for higher costs in the next 12 months, little more than half predict higher revenue and firms expecting to increase business investment are in a minority. The responses illustrate the storm clouds gathering over the recovery, with consumers also turning worried in the face of a looming squeeze on living standards.

“The business environment has deteriorated dramatically in recent weeks,” said Kitty Ussher, chief economist at the IoD. Business chiefs and now “far less certain about the overall economic situation.” The survey of 635 directors was carried out Sept. 13-27.

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