Business confidence remains depressed ahead of Budget

The latest IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, remained at historic low levels of -73 in October 2025, little changed from -74 in September, which was the lowest reading of the Index on record.

Business leader’ confidence in their own organisations crept up to ±0, from -7 in September.

All of the underlying indicators also saw a marginal improvement, with revenue expectations rising to +13 in October 2025, from ±0 in September. Headcount expectations rose to -2, from -13 whilst Investment intentions rose to -13, from -20. Cost expectations fell to +81, from +89 and export expectations rose to +8, from +6.

Anna Leach, Chief Economist at the Institute of Directors, said “Business confidence remained at rock bottom in October, as businesses expect the worst from the Autumn Budget. However, there was a marginal improvement in other areas, albeit from low bases: headcount expectations for the year ahead rose a little, cost expectations declined to their weakest in over a year and investment intentions ticked up. This speaks to a fragile resilience in underlying economic conditions, borne out by other data such as retail sales.

“Business leaders are worn out from the past year’s roller coaster of uncertainty and tax increases. We hear repeatedly of the effects: planning horizons shortened, hiring cancelled or outsourced, and discretionary spend on hold. Businesses need certainty over their costs – both tax and regulatory. We’re calling for the burden of tax rises to be spread more evenly across the economy, a business tax roadmap with sufficient breadth and depth to deliver meaningful certainty, and a holistic approach to regulation which accepts reasonable compromises to the Employment Rights Bill.”