Business leaders’ confidence in the UK economy has fallen to its lowest point since the height of the pandemic, according to the latest Directors’ Economic Confidence Index from the Institute of Directors (IoD). The index dropped to -53 in June 2025, down sharply from -35 in May, as business optimism faltered in the face of rising costs.
The net-balance index—based on a monthly IoD survey of hundreds of directors — measures the share of business leaders who are optimistic about the next 12 months minus those who are pessimistic, giving a range from +100 to -100. The latest figure leaves sentiment just 16 points above the index’s pandemic-era nadir of -69 recorded in April 2020. Investment intentions have also turned negative, with a net balance of -10 compared to 0 in May, while headcount expectations fell from -1 to -10.
Anna Leach, chief economist at the IoD, said: “Business leaders are finding economic conditions increasingly challenging, both as Autumn Budget tax measures take effect — particularly changes to national insurance, business, and agricultural property relief — and from ever-increasing global uncertainty. While the recently launched government strategies address many issues, the message is clear that tax increases have already undermined the industrial strategy’s goal to make the UK the best country for investment worldwide.”
The June reading follows a series of fiscal and policy changes impacting employers, including April’s rise in the main rate of National Insurance contributions from 13.8% to 15% and a 6.7% increase in the statutory National Living Wage. More than a third of businesses now plan to cut jobs or are considering it, according to a recent British Chambers of Commerce poll.
The regulatory landscape is set to tighten further in the coming months, with the Extended Producer Responsibility packaging levy taking effect in October and a sweeping overhaul of employment rights expected to add up to £5 billion a year in costs for UK firms.
With directors’ sentiment now closer to the pandemic trough than last year’s post-election rebound, the IoD’s survey signals heightened caution in boardrooms as new costs and regulation take hold.
