Finance
UK's Institute of Directors reports record-low business morale
Published by Global Banking and Finance Review
Posted on October 1, 2025
2 min readLast updated: January 21, 2026
Global Banking and Finance Review
Company
Published by Global Banking and Finance Review
Posted on October 1, 2025
2 min readLast updated: January 21, 2026
The UK's business confidence has plummeted to a nine-year low, according to the IoD, with potential job cuts and reduced investment on the horizon.
By David Milliken
LONDON (Reuters) -Britain's Institute of Directors said business confidence had fallen to its lowest in more than nine years in a survey published on Wednesday that pointed to job cuts and lower investment.
The bleak outlook - based on 588 responses, mostly from small or very small businesses - stands at odds with official data and some other private-sector surveys that still show moderate economic growth.
The IoD said its economic confidence index sank to -74 in September from -61 in August, its lowest since the survey began in July 2016, just after Britain voted to leave the European Union.
"Persistent fears that taxes on business and assets will rise are stifling confidence, holding back investment, and threatening growth and living standards," IoD Chief Economist Anna Leach said.
Finance minister Rachel Reeves is widely expected to need to raise tens of billions of pounds in extra taxation in her annual budget next month, and many businesses fear they again will be the main target as the government has ruled out raising most major taxes paid by individuals.
A separate survey by Lloyds Bank released on Tuesday also showed a big fall in September, although it remained similar to its average in 2024 and above typical levels the year before.
The IoD said businesses' cost expectations had reached the highest since it started surveying about this in November 2017, while intentions for investment and hiring sank deeper into negative territory.
"The effects of the April rises in employment taxes and the living wage, alongside future concerns over employment regulations, continue to reverberate across companies," Leach said.
Official data has shown seven consecutive monthly falls in the number of employees and the unemployment rate has risen to its highest since 2021 at 4.7%.
(Reporting by David Milliken; editing by Suban Abdulla)
Business confidence refers to the degree of optimism or pessimism that business leaders feel about the overall economic situation and their own company's prospects.
The unemployment rate is the percentage of the total labor force that is unemployed but actively seeking employment and willing to work.
Economic growth is the increase in the production of goods and services in an economy over a period of time, typically measured by the rise in Gross Domestic Product (GDP).
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