The outlook for global growth also got a boost after the European Central bank cuts its benchmark interest rate a quarter of a percentage point to 0.5 percent.
However, the IoD said that aggressive interest rate cuts by the Bank of England last year coupled with rising public spending should stave off a recession this year.
In addition, several of the world's central banks, including the U.S. Federal Reserve and the European Central Bank, took the unprecedented step of synchronizing interest rate cuts to kickstart credit markets.
This latest report could cloud hopes for more aggressive interest rate cuts from the US central bank, the Federal Reserve.
After weeks of speculation, Brazil's president-elect Dilma Rousseff has finally confirmed that she will be changing the central bank's governor, paving the way for big interest rate cuts.
Hans Tietmeyer, president of Germany's central bank, the Bundesbank, is standing by his view that unnecessary interest-rate cuts could be dangerous.
All this despite a slew of government interventions this week, including synchronized 50-basis-point interest rate cuts by the Federal Reserve, the European Central Bank and several other central banks, including China's.
The Fed's rapid interest-rate cuts have fostered an impression abroad that America's central bank does not care about the dollar.
One piece of good news this week is that following interest-rate cuts and the government's scrapping of tight restrictions on bank lending, total bank loans jumped by 19% in the 12 months to December, up from growth of 14% last summer.
Consumer confidence remains in the doldrums even after the central bank this month lowered interest rates to a record low 2.75%, adding to a string of rate-cuts since late 2011 designed to spur activity in weaker parts of the economy such as retail sales and housing.
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