Plans by companies to invest in their business and recruit new staff have “plumbed new depths” amid continuing damage to the economy caused by the Covid-19 crisis, new research suggests.

A survey by the Institute of Directors suggested that company directors’ confidence improved slightly in May, from a ​record low the month before.

But investment and hiring intentions for the next year have fallen to record lows, and most firms believe their revenue will be lower in the year ahead, while wages are also expected to fall, said the IoD.

The survey of 720 company directors shows that the Government needs to take action in the summer to kickstart investment and support employment as the furlough scheme draws to a close, said the report.

The Government must pull out the stops this summer

Tej Parikh, chief economist at the IoD, said: “It’s too early to say we’ve turned the corner. While more firms might feel they will be able to ride out the storm, many will struggle to go anywhere fast once it ends.

“Revenue isn’t expected to pick up, ​which means investment and hiring plans are very much on hold.

“The Government must pull out the stops this summer. If it holds back too much ammo for later in the year, firms’ recoveries will be slowed.

“When the furlough scheme ends, employment could take a hit. The Government should help companies fill the gap by reducing the cost of hiring.

“With cash tight, smaller firms could also benefit from tax breaks to adjust to the new normal, while the debt businesses have built up will hold back the economy unless it’s addressed.”