tl;dr
British business leaders have shown significantly lower confidence in the UK economy compared to the COVID-19 lockdown period, with government growth stimulation confidence hitting a record low since 2016. Nearly 85% distrust the government's ability to revive the economy, criticizing its economic p...
British business leaders have expressed significantly less confidence in the UK’s economy compared to the COVID-19 pandemic lockdowns, according to a recent IoD survey. Confidence in the government’s ability to stimulate growth has plummeted to a multi-decade low, with sentiment dropping sharply to minus 72 in July from negative 53 in June. This figure is the worst since the IoD began tracking economic confidence in 2016.
The survey reveals widespread dissatisfaction among business leaders, with nearly 85% expressing a lack of trust in the government’s capacity to revive the economy. Over two-thirds described its economic policies as “very unsuccessful” to date. This profound loss of confidence stems not only from short-term uncertainty but also from structural challenges believed to be dragging the economy downward.
Despite hopes that the new Labour government, installed in early July, would inspire revitalised growth, initial business reactions have been underwhelming. The recent increase in corporate taxes to fund social and infrastructure programs is viewed unfavourably, adding pressure on businesses already struggling. Anna Leach of the Institute of Directors notes the economic strain caused by rapid cost hikes without corresponding improvements to the business landscape.
Investor sentiment has continued to decline, contradicting expectations of an optimism boost following the election. Anticipated clarity around trade, planning reforms, and regulatory adjustments has not materialised, deepening uncertainty. Correspondingly, company-level confidence has also weakened, sliding from 3 in June to -9 in July — a near record low. Businesses are scaling back expansion plans, reducing budgets, and postponing recruitment due to anticipated higher wages and operating expenses.
These findings mirror wider economic indicators such as the S&P Global Purchasing Managers’ Index, which noted a marked slowdown in private sector growth during July. Employment trends reflect caution, with more companies cutting jobs and freezing new hires. The Labour government’s payroll tax increases have compounded these challenges.
Further complicating the outlook are global factors including trade tensions, geopolitical instability, and supply chain uncertainties, which particularly worry exporters. The IoD’s export plans index has slipped into negative territory for the first time in 2023, posing a significant challenge to Labour’s trade agenda which aims to renegotiate deals such as with the United States.
While diplomatic efforts bring some distant optimism, domestic paralysis and mounting global risks have intensified pessimism within the UK’s business community, making this a critical moment for policymakers seeking to restore confidence and foster sustainable economic growth.