Published by Global Banking & Finance Review®
Posted on January 14, 2026
2 min readLast updated: January 19, 2026
Add as preferred source on GoogleUK business confidence has reached a 3-year low, influenced by recent budget announcements. Tax and regulation are major concerns, while exporting businesses show resilience.
LONDON, Jan 14 (Reuters) - British businesses turned their most pessimistic in three years at the end of 2025 and their mood worsened after finance minister Rachel Reeves' budget at the end of November, a survey published on Wednesday showed.
The Institute of Chartered Accountants in England and Wales (ICAEW) said its gauge of business confidence fell to -11.1 in the fourth quarter, its lowest since the end of 2022 and down from -7.3 in third quarter.
Confidence slid across the September-to-December period and fell from -10.7 before Reeves' budget on November 26 to its final reading 0.4 points lower.
Last week another closely watched survey, the S&P Purchasing Managers' Index, showed only a marginal rise in business sentiment in December, in contrast to initial estimates of more of a pick-up after budget uncertainty lifted.
Reeves announced 26 billion pounds ($35 billion) of tax increases but delayed most of them and spared employers the kind of hit included in her first budget in 2024 when she raised a payroll tax.
Reeves and Prime Minister Keir Starmer are trying to speed up Britain's slow pace of economic growth and have said they will create the conditions to boost business investment.
The ICAEW survey also showed:
* Confidence has fallen for six quarters in a row; * A record 64% of firms said tax was a growing challenge,more than double the share at the time of the 2024 election; * Half of businesses worried about regulation, the highestproportion for more than seven years, reflecting concerns overnew employment rights legislation; * Confidence among exporting businesses rose, suggestingdomestic issues were behind the overall drop; * Indicators of sales activity in the months ahead improved; * 1,000 accountants took part in the telephone surveybetween October 8 and December 11.($1 = 0.7426 pounds)
(Writing by William Schomberg; editing by David Milliken)
Business confidence refers to the degree of optimism that business leaders feel about the overall economic environment and their own company's prospects. It can influence investment decisions and hiring.
Tax regulation refers to the laws and guidelines that govern how taxes are collected, reported, and paid by individuals and businesses. It can impact financial planning and compliance.
Economic growth is the increase in the production of goods and services in an economy over a period. It is often measured by the rise in Gross Domestic Product (GDP).
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