A bombshell poll has revealed British executives are gloomier than at any point since 2016 over the prospects for the UK economy. In a stunning blow to Chancellor Rachel Reeves, the poll by the Institute of Directors (IoD) found that a staggering 80% of business leaders were “very” or “quite” pessimistic about the prospects for the UK economy over the next year.
Elsewhere, 85% of business leaders thought that government policy so far will be unsuccessful in driving up economic growth, with 66% believed that it would be “very unsuccessful.” Anna Leach, Chief Economist at the Institute of Directors, said: “UK business leaders have entered the summer with the lowest confidence levels we’ve seen since our records began in 2016. Companies continue to battle cost increases – particularly arising from the national minimum wage and NI changes – and many are frustrated that while the government has been quick to raise costs for business, it has been much slower to deliver improvements to the wider business environment.”
The poll shows that business optimism has fallen to -72 in July 2025, down from -53 in June and lower than the outset of the covid pandemic in April 2020 when it fell to -69.
It said that concerns over tariffs, rising costs and the prospect of tax rises in the Autumn all contributed to a decline in optimism by business leaders and an increase in caution when making decisions.
Export expectations, revenue expectations and investment intentions all plummeted, with many firms having paused hiring and investment decisions as uncertainty swirls throughout industry.
Ms Leach added: “Last year, damaging speculation around tax rises in the lead-up to the 2024 Budget caused many firms to pause investment and hiring decisions – contributing to six months of near-zero economic growth.
“We’re now living with the economic consequences of those tax hikes, even as uncertainty around future costs once again builds.
“With ripple effects through the economy from tax changes and signs of consumer retrenchment, many firms report that they are struggling to plan amid a cacophony of risk.
“The government must urgently quash rumours of further tax rises for business this autumn and accelerate planning reforms and de-regulation to restore confidence and drive growth.”
Mel Stride, the Conservative shadow chancellor, told the Financial Times that the IoD’s poll was “yet more evidence of the damage Labour are inflicting on our economy.”