The IoD Directors’ Economic Confidence Index, which measures business leaders’ 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 leaders’ confidence in their 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.
Other findings from the survey include:
- Export expectations fell to -4 in July 2025, from +4 in June. This is the lowest reading of the indicator since its introduction in April 2023, and the first negative reading recorded.
- Investment intentions fell to -27, from -10 (matching low of -27 in November 2024 – series low -43 in May 2020).
- Revenue expectations fell to -8, from +8 (lowest since October 2020 – series low -57 in April 2020).
- Headcount expectations fell to -23, from -10 (lowest since November 2024, -24).
- Cost expectations rose to +84, from +81 (series high +87 in February 2025).
- Wage expectations rose to +65, from +40.
Elsewhere, 85% of business leaders thought that government policy so far would 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.
A growing sense of frustration
“UK business leaders have entered the summer with the lowest confidence levels we’ve seen since our records began in 2016,” said Anna Leach, Chief Economist at the Institute of Directors.
“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.
The country is now living with the economic consequences of those tax hikes, even as uncertainty around future costs once again builds, said Leach.
“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,” she said.
“The government must urgently quash rumours of further tax rises for business this autumn, and accelerate planning reforms and deregulation to restore confidence and drive growth.”
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