IoD press release Confidence amongst business leaders remains low ahead of “Liberation day”
The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, rose slightly to -58 in March 2025 from -64 in February.
Business leader confidence in their own organisations also rose slightly to +5, from +2 in February.
In terms of underlying indicators, cost expectations remained at +87, the same as February, which was the highest figure on record. When asked what was driving this outlook for the year ahead, business leaders indicated that the biggest factor was labour costs (including taxes) at 77%, followed by supply chain inflation (36%) and energy costs (34%).
With the exception of export expectations, which dropped from +7 in February to +5 in March, other underlying indicators have increased:
- Headcount expectations rose from -16 to -4.
- Investment intentions rose from -18 to -8.
- Wage expectations rose +38 to +49.
- Revenue expectations rose from +14 to +15.
Anna Leach, Chief Economist at the Institute of Directors, said:
“The confidence of business leaders across the UK remained depressed in March, with this month’s improvement still leaving the index around Covid pandemic lows. With the NICs and minimum wage increases now coming into effect, headcount and investment intentions remain well below the average of the last decade, albeit a little higher than they were. And business leaders are highly concerned about costs – with three quarters saying that employment costs are the biggest cost driver they face.
“The Spring Statement is now behind us and we breathe a sigh of relief that there were no nasty surprises. With global trade uncertainty elevated ahead of “Liberation day”, inflationary pressures up, and financial markets highly reactive, the pressures on growth show no signs of easing. But the OBR brought some hope in finding that planning reforms will pay off for growth in the longer term. The forthcoming Spending Review and accompanying Industrial Strategy represent key opportunities for the government to reinforce growth-positive policy measures, particularly through prioritising major infrastructure projects and de-regulation. But there is still work to be done to ensure that the costs of employment do not impede the UK’s growth ambitions.”
The IoD Directors’ Economic Confidence Index measures the net % positive answers from members of the Institute of Directors to the question ‘How optimistic are you about the wider UK economy over the next 12 months?’ on a five-point scale from ‘very optimistic’ to ‘very pessimistic’.
Full Results
605 responses from across the UK, conducted between 14-27 March 2025. 13% ran large businesses (250+ people), 18% medium (50-249), 25% small (10-49 people), 31% micro (2-9 people) and 13% sole trader and self-employed business entities (0-1 people).
How optimistic are you about both the wider UK economy and also your organisation over the next 12 months?
Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:
IoD member research shows cost concerns for the year ahead are at a record level. What are the biggest factors driving your outlook for costs over the year ahead? Please select all that apply.
