According to a recent survey by the Institute of Directors (IoD), the level of confidence among the business community in the UK economy has reached a record low. The survey indicates that business leaders are more critical of the country's economic prospects than they were during the lockdowns.
Overall Confidence Level in the Economy
In July, confidence in the UK economy fell to -72, a significant drop from -53 in June. This is the worst reading on record since the tracking began in 2016. IoD directors have noted that many business owners express bewilderment over the lack of a clear government plan for stimulating growth.
Response from the New Government
This record low coincided with the new government led by Prime Minister Keir Starmer taking office in early July. The government had promised investments in growth and better public services, but business leaders report that increased taxes have only added pressure on companies. Anna Leach, head of economic analysis at IoD, mentioned frustrations regarding the rapid increase in business operation costs without visible improvements in conditions.
Decline in Investment Intentions
The overall drop in confidence is also affecting daily business operations: the IoD’s confidence index regarding company performance fell from +3 in June to -9 in July. This is the second-lowest reading since data collection began. Firms are delaying expansion plans, cutting budgets, and pausing recruitment.
In this context, the sharp decline in confidence from the business community reflects deeper structural problems within the UK economy. Uncertainty surrounding economic policy and high tax rates present challenging conditions for business growth and development.
