Business leader confidence hits record low - IoD
By Abigail Townsend
Date: Wednesday 01 Oct 2025
(Sharecast News) - Confidence among business leaders fell sharply last month, a survey showed on Wednesday, as higher costs and the uncertain economic outlook weighed heavily.
According to the Institute of Directors, the latest Directors' Economic Confidence Index fell to -74 in September, from -61 in August. It is the lowest reading since the index resumed in July 2016.
Confidence in their own organisations also fell, dropping to -7 from 1 in August.
One of the worst-performing underlying indicators was cost expectations. That rose four points to 89, the highest reading since the measure was introduced in November 2017.
It was also two points ahead of the previous record high, seen in February this year.
The most significant cost, selected by 83% of respondents, was labour, followed by supply chain inflation and energy.
Headcount expectations also fell sharply, to -13 from -4, while investment inventions slid to -20 from -8.
Anna Leach, chief economist at the IoD, said: "Business leaders are calling for a reduction in government-generated costs, whether through a lower tax burden or lighter regulation.
"But crucially they are seeking a more coherent and credible plan for growth.
"The chancellor's conference speech rightly reiterated the role that fiscal credibility has in providing the platform for growth. But we urgently need a genuinely growth-focused Budget that has business at its heart."
Labour costs have spiked this year, on the back of rises to employer National Insurance contributions and the minimum wage.
Rachel Reeves is due to present her Budget at the end of November, and is battling a number of headwinds.
As well as stagnant economic growth and weak sentiment, inflation remains stubbornly above target, government spending is soaring and borrowing costs are mounting.
Reeves is increasingly widely-expected to put up taxes, despite manifesto pledges to the contrary.
The IoD survey, which is based on 588 responses, was conducted between 12 and 29 September. Around a third of respondents run large or medium-sized businesses, with the rest in charge of small, micro or sole trader companies.
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