IoD press release  Without rethink of employment reforms, government has little hope of success in boosting jobs

“Today’s data is evidence of a further weakening labour market, with the number of payrolled employees falling by 0.1% on the month, unemployment up 0.3pps on the quarter, and vacancies flatlining.

“These figures reflect the cumulative impact of historically low levels of business confidence and the government’s employment policies over the past year: increasing employer’s National Insurance Contributions, above-inflation increases to the National Living Wage, and the Employment Rights Act have all severely dampened employer demand for labour.

“The government’s compromise on additional protections against unfair dismissal was a welcome sign of willingness to listen to the concerns of the business community, but more needs to be done. An IoD survey over 500 business leaders in December 2025 found that 57% cited a significant scaling back of employment reforms as key to boosting business confidence. It is therefore imperative that government uses secondary legislation to make the Employment Rights Act more workable and less damaging for employers, for example by exempting SMEs from trade union access provisions.

“Without such compromises, the government’s ambition to promote growth and increase employment has little hope of success.”

Full Results

532 responses from across the UK, conducted between 19-31 December 2025. 12% ran large businesses (250+ people), 19% medium (50-249), 27% small (10-49 people), 31% micro (2-9 people) and 11% sole trader and self-employed business entities (0-1 people).

Throughout 2025, business confidence in UK economic prospects has stood at historically depressed levels. Which of the following would do most to boost business confidence in 2026? Please choose up to three.