Recovery in business confidence underway

04 Jun 2025

A recovery in business confidence underway with optimism rising among commercial leaders, according to the Institute of Directors (IoD).

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. A global economic slowdown was the most concerning global risk for businesses in 2025, followed by geopolitical tensions and cyber security risks.

Anna Leach, Chief Economist at the IoD, said it was 'good to see a recovery in business confidence underway'.

Leach continued: '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.'