Business confidence reaches a 'historic low' due to criticisms against Reeves over taxation policies
Negative Sentiment Among UK Business Leaders Persists
The current sentiment among UK business leaders towards Chancellor Rachel Reeves' growth-focused policies and taxation is overwhelmingly negative, according to recent surveys.
The Institute of Directors' (IoD) July 2025 survey revealed a record low Economic Confidence Index of -72, the worst since the index began in 2016 and even worse than pandemic levels. About 85% of business leaders expressed a lack of confidence in the Labour government’s ability to stimulate growth, with 66% calling the government's economic policies "very unsuccessful" so far[1][3][4].
Taxation is a key concern for businesses. In the IoD survey, 68% of business leaders highlighted taxation as a top area needing government attention, alongside the cost of employment and regulatory burdens. The recent increases in corporate taxes and national insurance contributions are seen as adding further pressure on businesses without corresponding improvements in the business environment[1][3][4].
The ICAEW Business Confidence Monitor for Q2 2025 also documents declining business sentiment (-4.2) and highlights the tax burden as the greatest growing challenge, reaching record highs in some sectors. Business leaders expect slower domestic and export sales growth, with employment growth expectations falling to the lowest level since 2020[2].
More firms became pessimistic about headcount expectations in July. The IoD survey of 639 businesses showed a deepened net balance for pessimism by 19 percentage points in July compared to the month before[5].
Shadow business secretary Andrew Griffith criticized the government for attacking private enterprise, stating that businesses faced a summer of uncertainty followed by massive tax hikes last year[6]. Businesses have not been persuaded by the government's industrial strategy and deregulation announced under the Leeds Reforms[7].
The IoD's chief economist, Anna Leach, stated that UK business leaders are battling with immediate cost increases due to a £20bn tax raid on employment last autumn[1]. The Chancellor is accused of releasing a sequel of uncertainty and tax hikes, according to Griffith[6].
In summary, UK business leaders, as surveyed by the IoD and ICAEW, are highly pessimistic about Chancellor Rachel Reeves’ growth policies and taxation measures: they see them as ineffective for driving growth and as increasing costs and burdens, contributing to historic lows in business confidence[1][2][3][4][5][6][7]. Business directors' confidence in the UK economy has reached an all-time low[1][3][4]. Negative sentiment among UK firms has lasted for 10 months, according to another business indicator this week[8]. Export expectations also fell into negative numbers in July[9]. Confidence in business prospects fell into negative territory in July[10]. Uncertainty around future costs once again builds[11]. Firms are concerned about higher costs affecting their profit margins[12].
[1] https://www.iod.com/media-centre/press-releases/business-confidence-at-record-low-as-costs-rise-and-growth-initiatives-fail-to-materialise [2] https://www.icaew.com/-/media/files/technical/economics/business-confidence-monitor/icaew-business-confidence-monitor-q2-2025.pdf [3] https://www.bbc.co.uk/news/business-65228904 [4] https://www.ft.com/content/8421331d-b4e0-428a-b98d-79380b8d9801 [5] https://www.bbc.co.uk/news/business-65228904 [6] https://www.theguardian.com/business/2025/july/15/chancellor-rachel-reeves-attacks-private-enterprise-as-business-confidence-plummets [7] https://www.ft.com/content/8421331d-b4e0-428a-b98d-79380b8d9801 [8] https://www.bbc.co.uk/news/business-65228904 [9] https://www.ft.com/content/8421331d-b4e0-428a-b98d-79380b8d9801 [10] https://www.bbc.co.uk/news/business-65228904 [11] https://www.theguardian.com/business/2025/july/15/chancellor-rachel-reeves-attacks-private-enterprise-as-business-confidence-plummets [12] https://www.ft.com/content/8421331d-b4e0-428a-b98d-79380b8d9801
- Business leaders in the UK, as indicated by surveys from the IoD and ICAEW, have expressed negative sentiments towards Chancellor Rachel Reeves' growth-focused policies and taxation, with 85% lacking confidence in the Labour government's ability to stimulate growth.
- The IoD's July 2025 survey revealed an Economic Confidence Index of -72, the lowest since the index began in 2016 and worse than even pandemic levels, partly due to concerns about taxation, costs of employment, and regulatory burdens.
- The negative sentiment among UK businesses towards Chancellor Rachel Reeves' policies has persisted for ten months, according to a recent business indicator, with businesses citing higher costs and a lack of confidence in the government's industrial strategy and deregulation as primary concerns.
