Finance
UK business sentiment improves in January, Institute of Directors says
Published by Global Banking & Finance Review®
Posted on February 2, 2026
2 min readLast updated: February 2, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on February 2, 2026
2 min readLast updated: February 2, 2026
UK business sentiment improved in January 2026, with optimism rising significantly. Confidence in operations also strengthened, though businesses plan to trim staff and investment.
LONDON, Feb 2 (Reuters) - British businesses' confidence in the economic outlook has continued to improve from very weak levels, a survey for January showed, extending gains since finance minister Rachel Reeves' November budget imposed fewer immediate tax rises than feared.
The Institute of Directors said on Monday that optimism about prospects for the UK economy remained deep within negative territory, but it rose to -48 in January from -66 in December and was the highest level since last May. It hit an all-time low of -74 in September for the series, which started in 2016.
The upturn matches an improvement in other business surveys including preliminary purchasing managers' index data for January. Final PMI figures are due this week.
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.
"After record weakness last year, January saw a welcome – and fairly chunky – rise in the confidence of business leaders," IoD Chief Economist Anna Leach said.
However she added: "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".
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 and Susan Fenton)
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.
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.
Staffing trends refer to the patterns and changes in employment levels, hiring practices, and workforce management within businesses.
Investment confidence is the level of assurance investors have in the market conditions and potential returns on their investments.
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