Business Confidence Plummets Post-Budget
The Institute of Directors (IoD) has reported a further significant decline in UK business leaders' confidence in the national economy and their own organisations, following Chancellor Rachel Reeves' Autumn Budget 2024 announcement. The survey, conducted in November 2025, highlighted a marked deterioration in sentiment across key economic indicators, pushing optimism levels to near those seen during the COVID-19 pandemic.
Rachel Reeves delivered her maiden Autumn Budget Statement on Wednesday, October 30, 2024, outlining the government's taxing, borrowing, and spending plans. The Budget included measures such as an increase in employer National Insurance contributions (NICs) from 13.8% to 15% from April 2025, alongside a reduced threshold for NICs, and an above-inflation rise in the minimum wage. The Office for Budget Responsibility (OBR) reportedly indicated that the Budget's growth-focused policies would not materially boost output, and growth predictions were subsequently downgraded.
Key Findings from the IoD Survey
The IoD's Directors' Economic Confidence Index, which gauges business leaders' optimism about the wider UK economy, registered -73 in November before the Budget. A snap poll conducted immediately after the announcement saw only a marginal improvement to -72, remaining at a near-record low. More critically, confidence in business leaders' own organisations saw a sharp drop from -5 in November to -20 directly following the Budget, marking the second-lowest monthly reading on record since April 2020.
The survey also revealed significant shifts in specific business expectations:
- Revenue expectations fell from +7 to -8 post-Budget, reaching their lowest point since September 2020.
- Headcount expectations plummeted from -8 to -29, representing the third-lowest reading for this indicator.
- Investment intentions declined from -17 to -39, the second-lowest reading after May 2020.
- Export expectations also saw a decrease, moving from +6 to -2.
Business Concerns and Economic Outlook
Business leaders cited several factors contributing to their dampened outlook. UK economic conditions remained the most significant concern, highlighted by 77% of respondents. Concerns over employment taxes (60%) and business taxes (50%) also featured prominently. Anna Leach, Chief Economist at the IoD, noted that the Budget 'seems to have dented not just confidence in the UK economy, but also in firms' ability to grow in it.'
The findings underscore a challenging environment for UK businesses, with the Autumn Budget's tax-raising measures, estimated to be around £26 billion, failing to alleviate concerns about future growth and profitability. The overall sentiment suggests that businesses are bracing for continued economic headwinds, with investment and hiring plans being scaled back in response to the perceived lack of growth-stimulating policies.
5 Comments
Bella Ciao
It's worrying to see business confidence plummet, especially with investment intentions so low. However, the government faces immense pressure to fund public services, and tax increases are often the most direct route.
Muchacha
Reeves' policies are clearly stifling growth. The IoD report proves it.
Mariposa
Another blow to the economy. Businesses can't thrive under these tax burdens.
Fuerza
The IoD only represents big business interests. What about the average worker?
Manolo Noriega
The IoD's findings are concerning, pointing to a difficult environment for businesses to grow. However, the OBR's initial growth predictions were already low, implying the budget's impact might be exacerbating an existing problem rather than solely creating it.