The Institute of Directors’ Economic Confidence Index dropped sharply from -53 in June 2025 to a record low of -72 in July, surpassing the previous low of -69 set in April 2020. This represents the lowest confidence levels recorded since the index began in 2016. Confidence in individual businesses also declined significantly, falling from +3 to -9, marking the second-lowest reading on record.
Several key business indicators showed weakening trends. Export expectations fell below zero for the first time since April 2023, dropping from +4 to -4. Investment plans weakened, sliding from -10 to -27, while revenue projections declined from +8 to -8. Expectations for hiring dropped from -10 to -23. Meanwhile, cost pressures intensified, rising from +81 to +84, close to the highest point recorded, and wage growth expectations jumped from +40 to +65.
A large majority (85%) of IoD members feel government policies will fail to stimulate economic growth, with 66% describing them as highly ineffective. The most pressing concerns are taxation (68%), employment costs (64%), and regulatory hurdles (48%).
Anna Leach, Chief Economist at the IoD, noted that business confidence is at a historic low. She pointed to rising costs from increases in the minimum wage and National Insurance, combined with slow progress on improving the business climate. Leach also highlighted that tax rise speculation before the 2024 Budget caused many companies to halt investment and recruitment, stalling growth for half a year. She urged the government to dispel further tax rise rumours and accelerate reforms to rebuild confidence and encourage growth.
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