UK Business Confidence Remains Critically Low Ahead of Autumn Budget

IoD Index Reflects Deep-Seated Pessimism

The IoD Directors' Economic Confidence Index for the United Kingdom remained at a critically low level of -73 in October 2025. This figure, while a marginal improvement from September's record low of -74, underscores persistent pessimism among business leaders regarding the wider UK economy. The September reading marked the lowest point for the index since its inception in July 2016, surpassing previous lows of -72 in July 2025 and -69 in April 2020.

Anna Leach, Chief Economist at the Institute of Directors, stated that 'Business confidence remained at rock bottom in October, as businesses expect the worst from the Autumn Budget.' She also noted a 'fragile resilience in underlying economic conditions' despite the overall gloom.

Key Drivers of Business Concern

Several factors are contributing to the sustained low confidence. A primary concern for businesses is the expectation of the upcoming Autumn Budget. Business leaders are particularly wary of potential tax increases, with speculation surrounding changes to wealth, property, pension tax reliefs, and inheritance tax. The Treasury's delay in confirming small business rate relief extensions has further dampened sentiment.

Rising operational costs are another significant burden. Labour costs were cited by 83% of businesses as a major factor, alongside supply chain inflation and elevated energy costs. The regulatory burden and high borrowing costs also contribute to the challenging environment. This uncertainty has led to shortened planning horizons, cancelled hiring, and delayed discretionary spending across many organisations.

Anticipation for the Autumn Budget

The Autumn Budget 2025 is scheduled to be delivered by Chancellor Rachel Reeves on Wednesday, November 26, 2025. The government has committed to holding a single annual Budget in late autumn, aiming to provide greater stability for businesses. However, the current climate suggests that the Chancellor faces pressure to raise revenue, with tax hikes being a strong possibility.

While confidence in their own organisations saw a slight uptick to ±0 in October from -7 in September, other indicators remain subdued. Headcount expectations, for instance, improved marginally to -2 from -13, but still indicate a contraction. Investment intentions also rose slightly to -13 from -20, remaining in negative territory. These figures highlight that despite some minor improvements in specific areas, the overall economic outlook for UK businesses remains challenging and uncertain as they await the government's fiscal plans.