Business confidence falls

The IoD Directors’ Economic Confidence Index, which measures business leaders optimism in prospects for the UK economy, fell back to -53 in June 2025, having risen to -35 in May.

Business leaders’ confidence in their organisations also fell to +3, having reached +15 in May.

Investment intentions fell to -10 in June 2025, from ±0 in May. Whilst revenue expectations fell to +8, from +18. Export expectations fell to +4, from +9 and headcount expectations fell to -10, from -1.

Cost expectations reduced to +81, from +83 with wage expectations reduced to +40, from +45.

Anna Leach, Chief Economist at the Institute of Directors, said “It is disappointing to see the confidence of UK business leaders in the economy dropping back again this month. The IoD’s confidence measure has now lost about half the gains made since November. Headcount and investment intentions also deteriorated in June, with headcount expectations weakening most.

“Business leaders are finding economic conditions increasingly challenging, both as Autumn Budget tax measures take effect – particularly changes to national insurance, business and agricultural property relief – and from ever increasing global uncertainty. While the recently launched strategies from the government tick many boxes, the message coming through is that the tax increases unleashed on business have already undermined the industrial strategy’s ambition “to make the UK the best country to invest anywhere in the world”.

“The reality is that the government has been much more radical in taxing business than it has been in removing blockers to growth. We need to see faster progress and greater ambition on de-regulation – particularly planning reform – and a reconsideration of the tax landscape for business if we’re to change the UK’s economic fortunes.”