Janice R. Andrews
Confidence among UK business leaders has fallen to its lowest level since the start of the Covid-19 pandemic, according to a recent Institute of Directors (IOD) survey. The decline follows Labour’s tax-heavy Budget and months of discouraging rhetoric about the country’s economic prospects.
The survey, which gathered responses from over 600 top executives, revealed a confidence rating of -65 in November, nearing the record low of -69 recorded in April 2020. This steep drop has sparked concerns that businesses may scale back investment, putting the UK economy at risk of stagnation.
Labour’s Budget Under Fire
Chancellor Rachel Reeves’s £40 billion tax increases announced in October have been met with widespread criticism from business leaders. Key measures, including a rise in the national minimum wage and higher National Insurance contributions, have been blamed for eroding confidence and discouraging private-sector investment.
Anna Leach, chief economist at the IOD, commented:
“As businesses absorb the Budget, confidence has continued to fall. Rather than strengthening the economy’s foundation, the Budget has weakened it, harming businesses’ ability to invest in their operations and workforces.”
The IOD has also expressed concern over proposed changes to inheritance tax and business property relief, warning these could further hinder economic growth.
Calls for a Positive Shift
In response to criticism, Reeves defended her fiscal approach, stating the tax hikes were essential to stabilize public finances and restore vital public services. She reassured businesses that no further large-scale tax increases would be necessary. However, the IOD has urged the government to strike a more optimistic tone and adjust policies to restore confidence.
“We encourage the government to find ways to minimize the negative effects of the Budget and promote a more positive growth narrative,” the IOD said.
The Confederation of British Industry (CBI) has echoed these concerns, highlighting challenges businesses face in expanding and hiring. Shadow Business Secretary Andrew Griffith added:
“This collapse in business confidence stems from Labour’s jobs tax, its union-driven Employment Bill, and months of economic negativity. It’s jobs and investment that will suffer.”
Economic Outlook
The sharp drop in business confidence points to significant risks for the UK economy, with reduced investment potentially leading to slower growth and fewer job opportunities. Business groups have called for immediate revisions to taxation and regulatory policies to support recovery and rebuild optimism.
The IOD survey underscores the urgent need for policy adjustments and a shift in rhetoric to address concerns from the business community. Without swift action, the UK economy faces a prolonged period of uncertainty and stagnation.
