- Business confidence slid to -11.1 in late 2025, the weakest since 2022
- Tax worries hit a record 64 per cent of firms, survey shows
- Exporters feel steadier, pointing to domestic pressures at home
British businesses ended 2025 in their most pessimistic mood in three years, with confidence slipping further after the November budget, according to a closely watched survey published on January 15.
The Institute of Chartered Accountants in England and Wales said its business confidence index fell to -11.1 in the fourth quarter, down from -7.3 in the previous quarter and the lowest reading since the end of 2022. Confidence weakened steadily between September and December and dropped again after the budget delivered on November 26 by finance minister Rachel Reeves, the survey showed.
Before the budget, the index stood at -10.7. By the end of the quarter, it had slipped a further 0.4 points.
Budget nerves and rising pressures
The findings suggest that uncertainty around tax and regulation is weighing heavily on firms. Reeves announced £26 billion ($35 billion) in tax increases in her November budget, although most of the measures were delayed and employers were spared a repeat of the payroll tax rise introduced in her first budget in 2024.
Despite that, concerns have continued to build. The ICAEW survey found that 64 per cent of firms now see tax as a growing challenge, more than double the share recorded around the time of the 2024 election. Half of businesses said regulation was a concern, the highest proportion in more than seven years, reflecting unease over new employment rights legislation.
Confidence has now fallen for six consecutive quarters, underlining how difficult the operating environment has become for many firms.
Beneath the gloom
Not all the signals were negative. Confidence among exporting businesses improved, suggesting that the sharp drop in overall sentiment was driven largely by domestic issues rather than weaker overseas demand.
Indicators tracking expected sales activity in the months ahead also showed some improvement, pointing to tentative hopes of stabilisation.
The cautious mood echoed other recent data. A survey from S&P’s purchasing managers’ index showed only a marginal rise in business sentiment in December, falling short of earlier estimates that had pointed to a stronger rebound once budget uncertainty eased.
Reeves and Prime Minister Keir Starmer have said their priority is to lift Britain’s sluggish economic growth and create conditions that encourage business investment. For now, the latest survey suggests many firms remain unconvinced, even as policymakers push their growth agenda.
The ICAEW survey was based on telephone interviews with around 1,000 accountants, conducted between October 8 and December 11.
