IoD: Economic confidence plummets to all time low
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The IoD Directors' Economic Confidence Index, which measures
business leader optimism in prospects for the UK economy, fell to
-72 in July 2025 from -53 in June. This exceeds the previous record
low of -69 in April 2020 and marks the lowest reading of the Index
since its introduction in July 2016. Business leader confidence in
their own organisations also fell to -9 in July 2025, from +3 in
June. This is the second lowest reading of this indicator since its
introduction in...Request free trial
The IoD Directors' Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, fell to -72 in July 2025 from -53 in June. This exceeds the previous record low of -69 in April 2020 and marks the lowest reading of the Index since its introduction in July 2016. Business leader confidence in their own organisations also fell to -9 in July 2025, from +3 in June. This is the second lowest reading of this indicator since its introduction in July 2016. This negative trend is also reflected in the underlying indicators:
Elsewhere, 85% of business leaders thought that government policy so far will be unsuccessful in driving up economic growth (66% indicated very unsuccessful). When asked which areas business leaders would most like the government to address to support their business, IoD members highlighted taxation (68%), the cost of employment (64%), and the regulatory burden (48%) as the top priorities. Anna Leach, Chief Economist at the Institute of Directors, said: “UK business leaders have entered the summer with the lowest confidence levels we've seen since our records began in 2016. Companies continue to battle cost increases – particularly arising from the national minimum wage and NI changes – and many are frustrated that while the government has been quick to raise costs for business, it has been much slower to deliver improvements to the wider business environment. “Last year, damaging speculation around tax rises in the lead-up to the 2024 Budget caused many firms to pause investment and hiring decisions – contributing to six months of near-zero economic growth. We're now living with the economic consequences of those tax hikes, even as uncertainty around future costs once again builds. With ripple effects through the economy from tax changes and signs of consumer retrenchment, many firms report that they are struggling to plan amid a cacophony of risk. The government must urgently quash rumours of further tax rises for business this autumn, and accelerate planning reforms and de-regulation to restore confidence and drive growth.”
The IoD Directors' Economic Confidence Index measures the net % positive answers from members of the Institute of Directors to the question ‘How optimistic are you about the wider UK economy over the next 12 months?' on a five-point scale from ‘very optimistic' to ‘very pessimistic'. Full Results 639 responses from across the UK, conducted between 11-30 July 2025. 18% ran large businesses (250+ people), 16% medium (50-249), 21% small (10-49 people), 34% micro (2-9 people) and 10% sole trader and self-employed business entities (0-1 people). How optimistic are you about both the wider UK economy and also your organisation over the next 12 months?
Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:
894 responses from across the UK, conducted between 11-30 July 2025. 17% ran large businesses (250+ people), 18% medium (50-249), 23% small (10-49 people), 33% micro (2-9 people) and 10% sole trader and self-employed business entities (0-1 people). To what extent do you think government policy so far will be successful in driving up economic growth?
In which of the following areas would you most like to see government action to support your business? Please select your top three
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