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2h ago

UK Business Confidence Hits Record Low as Firms Brace for Budget Tax Rises

Executives cite rising labour costs alongside looming tax rises as the key drag on sentiment.

Skyscrapers of the Canary Wharf commercial district are seen with The Shard building and construction cranes reflected in a perimeter glass wall of the viewing area of Garden at 120, in the City of London financial district, in London, Britain, September 23, 2025. REUTERS/Toby Melville
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Rachel Reeves visits some of the stands at the Labour Party conference in Liverpool

Overview

  • The Institute of Directors’ index fell to -74 in September from -61 in August, the lowest reading since the survey began in 2016, based on 588 responses largely from smaller firms.
  • Cost pressures intensified with a record high in cost expectations, as 83% of respondents pointed to labour costs after increases to employer National Insurance and the minimum wage in April.
  • Investment intentions dropped to -20 and headcount expectations to -13, revenue expectations fell to zero, and nearly a third of leaders said they plan to cut jobs over the next year.
  • A separate Lloyds Bank Business Barometer also weakened, sliding to 42 from 54 in September.
  • Official data show GDP grew 0.3% in Q2 and unemployment rose to 4.7%, while businesses prepare for a November 26 Budget widely expected to raise tens of billions of pounds in taxes.