IoD press release  Economic confidence unchanged after Budget, as business leaders call for spending restraint

The Chancellor’s Budget did not have a significant impact on the headline index. In a snap poll immediately following the Budget, the index was little changed at -43.

Business leader confidence in their own organisations rose ahead of the Budget to +19 in October, from +10 in September. However, the post-Budget snap poll showed organisational confidence dropped back to -1.

In the underlying data:

• Revenue expectations increased to +28 in October ahead of the Budget from +21 in September, the highest level since July 2024 (and just above the long run average of +27 since 2016). However post-Budget, this dropped to +8 – its lowest since December 2025.
• Costs expectations were little changed at +78, from +79 ahead of their Budget, well above the series average (+67). Post-Budget they edged up to +81.
• Investment intentions increased to +1 ahead of the Budget, from -8, their highest since August 2024 (long run average +5). Post-Budget, they dropped back down to -9.
• Headcount expectations rose to +2, from -2 ahead of the Budget, their highest since April 2025 (long run average +10). Post-Budget, they fell to -6.
• Export intentions rose to +13, from +8, the highest since June 2024 (long run average +9). Post-Budget, they dipped back to +8.

Anna Leach, Chief Economist at the Institute of Directors, said:

“Our October survey, which closed just before the Chancellor’s Budget speech, showed an ongoing recovery in confidence in the wider UK economy, with our Decision Makers Economic Confidence Index at its highest level since May 2025. Encouragingly, businesses’ expectations for their own performance had recovered substantially, with confidence in their own organisations and revenue expectations returning to around September 2024 levels, and investment and hiring intentions moving back into positive territory.

“However, our post-Budget snap poll suggests the Budget has done little to encourage business leaders to take their investment and recruitment plans out of mothballs. While confidence in the wider economy held up, revenue expectations fell sharply to their weakest in ten months, while investment and hiring intentions also deteriorated.

“Ahead of the Budget, business leaders were clear that they wanted the Chancellor to address the deterioration in the public finances. Three-quarters favoured reducing welfare spending, nearly six in ten supported reducing departmental spending, and four in ten wanted reforms to make the pensions triple lock less expensive. Instead, the Chancellor has allowed fiscal headroom to fall substantially, leaving the public finances with relatively little protection against further shocks. With the Milburn and Timms reviews due shortly, there is an opportunity to develop welfare reforms that both improve employment outcomes and put spending on a more sustainable footing. But the Chancellor has not committed to bringing the welfare bill down within this Parliament.

“With difficult decisions on spending still ahead and limited fiscal headroom, businesses will be concerned that the risk of further tax increases has not gone away. After two years of weak business confidence, the priority remains to provide a more stable and supportive environment in which firms can invest, recruit and grow.”

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

Pre-Budget poll: 452 responses from across the UK, conducted between 16-28 October. 13% ran large businesses (250+ people), 21% medium (50-249), 20% small (10-49 people), 33% micro (2-9 people) and 13% sole trader and self-employed business entities (0-1 people).

Post-Budget snap poll: 278 responses from across the UK, conducted in the 24 hours after the Chancellor’s Budget Statement. 14% ran large businesses (250+ people), 19% medium (50-249), 25% small (10-49 people), 30% micro (2-9 people) and 11% 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?

Pre-Budget: Comparing the next 12 months with the last 12 months, what do you believe the outlook for your organisation will be in terms of:

Pre-Budget: The Chancellor’s “headroom” against the fiscal rules is expected to have fallen due to a rise in UK Government borrowing costs. How do you think the Chancellor should plug the gap?