Market Update: IoD press release: Economic confidence plummets to all time low – Full Analysis

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:

• 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 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.”