IoD press release Recovery in business confidence is underway
The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, jumped to -35 in May 2025 from -51 in April – the highest that the Index has been since August 2024 (-12).
Business leader confidence in their own organisations rose slightly to +15 from +13.
In terms of the underlying indicators:
- Investment intentions rose to 0 in May 2025, from -5 in April.
- Revenue expectations rose to +18 from +14.
- Export expectations rose to +9 from +8.
- Cost expectations remained at +83.
- Headcount expectations fell to -1 from +3.
- Wage expectations rose to +45 from +43.
The top 3 factors having a negative impact on organisations remained the same as February 2025, when this question was last polled – UK economic conditions (67%, down from 73% in February), employment taxes (59%, down from 64%) and business taxes (45%, down from 50%). However, global economic conditions jumped into fourth position (41%, up from 29%).
This was also reflected in the global risks that are the most concerning for businesses in 2025, with a global economic slowdown coming out top, as indicated by 62% of business leaders (up from 55% in February). Cyber security risks, in third place behind rising geopolitical tensions, also saw a significant increase (47%, up from 38%).
Anna Leach, Chief Economist at the Institute of Directors, said:
“It’s good to see a recovery in business confidence underway, with our headline measure moving up three months in a row to its highest since August 2024. Looking at our underlying indicators, while investment intentions have also returned to last summer’s levels, headcount expectations have dropped again and remain notably down. Meanwhile businesses are more concerned about a global economic slowdown, as well as cyber security risks following a number of high profile attacks on retailers. Business leaders tell us that while they see some key growth opportunities for the UK in the coming year in areas such as energy innovation, defence, construction and through a closer relationship with the EU, much hinges on the government delivering a coherent business-friendly policy environment.
“The Spending Review is rapidly approaching, and it is concerning to see UK government borrowing costs rising amidst building pressure to unwind attempts to moderate public sector spending. Spending has already been increased in both nominal and real terms compared with pre-election, and public sector productivity remains woeful. We urge the Chancellor to hold fast to her spending envelope – further tax rises risk damaging the economy further.”
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
483 responses from across the UK, conducted between 15-28 May 2025. 14% ran large businesses (250+ people), 19% medium (50-249), 24% small (10-49 people), 31% micro (2-9 people) and 12% 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:
Which of the following, if any, are having a negative impact on your organisation?
Which of the following global risks are the most concerning for your business in 2025? Please choose up to three
