Credit, Collections & Insolvency News
The IoD Directors’ Economic Confidence Index, which measures business leaders’ optimism in prospects for the UK economy, jumped to -35 in May 2025 from -51 in April – the highest that the Index has been since August 2024 (-12). Business leader’ confidence in their own organisations rose slightly to +15 from +13.
In terms of the underlying indicators:
The top three factors having a negative impact on organisations remained the same as February 2025, when this question was last polled – UK economic conditions (67%, down from 73% in February), employment taxes (59%, down from 64%) and business taxes (45%, down from 50%). However, global economic conditions jumped into fourth position (41%, up from 29%).
This was also reflected in the global risks that are the most concerning for businesses in 2025, with a global economic slowdown coming out top, as indicated by 62% of business leaders (up from 55% in February). Cyber security risks, in third place behind rising geopolitical tensions, also saw a significant increase (47%, up from 38%).
Anna Leach, Chief Economist at the Institute of Directors, said “It’s good to see a recovery in business confidence underway, with our headline measure moving up three months in a row to its highest since August 2024. Looking at our underlying indicators, while investment intentions have also returned to last summer’s levels, headcount expectations have dropped again and remain notably down. Meanwhile, businesses are more concerned about a global economic slowdown, as well as cybersecurity risks following a number of high-profile attacks on retailers. Business leaders tell us that while they see some key growth opportunities for the UK in the coming year in areas such as energy innovation, defence, construction and through a closer relationship with the EU, much hinges on the government delivering a coherent, business-friendly policy environment.
“The Spending Review is rapidly approaching, and it is concerning to see UK government borrowing costs rising amidst building pressure to unwind attempts to moderate public sector spending. Spending has already been increased in both nominal and real terms compared with pre-election, and public sector productivity remains woeful. We urge the Chancellor to hold fast to her spending envelope – further tax rises risk damaging the economy further.”
How optimistic are you about both the wider UK economy and also your organisation over the next 12 months?
| Very optimistic | Quite optimistic | Neither optimistic nor pessimistic | Quite pessimistic | Very pessimistic | Don’t know | |
| Wider UK economy | 1.0% | 17.8% | 27.3% | 39.3% | 14.3% | 0.2% |
| Your (primary) organisation | 6.4% | 32.9% | 35.4% | 19.5% | 4.8% | 1.0% |
Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:
| Much higher | Somewhat higher | No change | Somewhat lower | Much lower | N/A | Don’t know | |
| Business investment | 3.1% | 26.3% | 38.1% | 19.5% | 10.4% | 1.7% | 1.0% |
| Costs | 19.0% | 66.9% | 9.7% | 1.9% | 0.8% | 0.8% | 0.8% |
| Exports | 3.7% | 13.9% | 31.3% | 6.6% | 2.3% | 40.8% | 1.4% |
| Headcount | 2.7% | 24.0% | 43.1% | 23.6% | 4.3% | 1.2% | 1.0% |
| Revenue | 5.6% | 41.2% | 22.6% | 23.6% | 4.8% | 0.8% | 1.4% |
| Wages | 4.1% | 48.9% | 37.1% | 6.0% | 1.7% | 1.4% | 0.8% |
Which of the following, if any, are having a negative impact on your organisation?
| February 2025 | May 2025 | |
| UK economic conditions | 73.1% | 67.1% |
| Employment taxes | 63.6% | 59.0% |
| Business taxes | 49.6% | 45.1% |
| Global economic conditions | 28.5% | 41.4% |
| Skills shortages and/or labour shortages | 30.7% | 36.2% |
| Compliance with government regulation | 33.3% | 33.3% |
| Cost of energy | 29.5% | 31.9% |
| Trading relationship with the EU | 22.7% | 23.2% |
| Difficulty or delays obtaining payment from customers | 19.7% | 20.5% |
| Transport cost/speed/reliability | 15.7% | 15.9% |
| Cost/availability of finance | 15.4% | 15.9% |
| Supply chain disruption | 7.4% | 12.4% |
| Broadband cost/speed/reliability | 10.9% | 9.1% |
| None | 2.3% | 1.4% |
Which global risks are the most concerning for your business in 2025?
| February 2025 | May 2025 | |
| Global economic slowdown | 55.3% | 61.9% |
| Rising geopolitical tensions | 58.7% | 51.6% |
| Cyber security risks | 38.0% | 47.2% |
| Global trade war | 37.1% | 40.2% |
| US presidential election outcome | 27.7% | – |
| Trump administration | – | 38.3% |
| Misuse of artificial intelligence | 23.0% | 24.2% |
| Extreme weather events | 13.1% | 8.1% |
| Global health risks | 6.3% | 7.5% |
| None | 4.5% | 4.1% |
| Don’t know | 1.5% | 1.0% |