Finance
UK business sentiment rebounds in January, IoD says
Published by Global Banking and Finance Review
Posted on February 2, 2026
2 min readLast updated: February 2, 2026
Quick Summary
UK business sentiment improved in January 2026, with optimism rising significantly. Confidence in operations also strengthened, though businesses plan to trim staff and investment.
UK Business Confidence Sees Improvement in January, Says IoD
UK Business Sentiment Overview
LONDON, Feb 2 (Reuters) - British entrepreneurs' negativity about the economic outlook reduced at the start of 2026, rising to its highest since May and extending gains since finance minister Rachel Reeves' November budget imposed fewer immediate tax rises than feared.
Optimism and Economic Outlook
The Institute of Directors said that optimism about prospects for the UK economy rose to -48 in January from -66 in December, after touching an all-time low of -74 in September for the series, which started in 2016.
Confidence in Operations
The upturn matches an improvement in other business surveys including preliminary purchasing managers' index data for January. Final PMI figures are due this week.
Staffing and Investment Trends
Businesses' confidence in their own operations also strengthened, rising to +14 from -4 as revenue and export expectations rose to their highest since September 2024 and July 2024 respectively.
Nonetheless, the businesses said they still intended to trim staff numbers and reduce investment, albeit to a lesser extent than before.
"Overall, there's a sense that, while revenues and general conditions have stabilised, businesses are not yet ready to increase either their capital or labour costs materially," IoD Chief Economist Anna Leach said.
The IoD survey was conducted from January 16-28 and was based on response from 578 businesses, most of which employed less than 50 staff.
(Reporting by David Milliken, editing by Andy Bruce)
Key Takeaways
- •UK business sentiment improved in January 2026.
- •Optimism rose to -48 from -66 in December.
- •Confidence in operations increased to +14.
- •Businesses plan to reduce staff and investment less.
- •IoD survey conducted with 578 businesses.
Frequently Asked Questions about UK business sentiment rebounds in January, IoD says
1What is business confidence?
Business confidence refers to the level of optimism or pessimism that business leaders feel about the overall economic environment and their own company's prospects.
2What is economic outlook?
Economic outlook is an assessment of the future performance of an economy, often based on various indicators such as GDP growth, unemployment rates, and inflation.
3What is staffing trend?
Staffing trends refer to the patterns and changes in employment levels, hiring practices, and workforce management within businesses.
4What is investment confidence?
Investment confidence is the level of assurance investors have in the market conditions and potential returns on their investments.
