Do you believe that the Chancellor can turn around the country’s economy? (Image: Getty)
Damning figures show that 80% of business leaders questioned are pessimistic about the UK’s prospects of turning around the economy. The poll, produced by the Institute of Directors, found that economic confidence amongst business leaders is at its lowest point since they began tracking in 2016, lower than in the aftermath of Brexit and at the height of the pandemic.
The responses of those asked gave an even more damning indictment of the government’s economic record since taking power, with a staggering 85% believing that policies implemented thus far will be unsuccessful in driving up economic growth. Anna Leach, Chief Economist at the Institute of Directors highlighted concerns over tariffs, rising costs and the prospect of tax rises in the Autumn as factors underpinning pessimism. Last month, it was revealed that the UK economy shrank by 0.1% in May.
Ms Leach urged the government to quash fears of imminent tax rises for businesses in the upcoming budget in order to ease fears and encourage increased investment.
She said: “UK business leaders have entered the summer with the lowest confidence levels we’ve seen since our records began in 2016.
“Companies continue to battle cost increases – particularly arising from the national minimum wage and NI changes – and many are frustrated that while the government has been quick to raise costs for business, it has been much slower to deliver improvements to the wider business environment.”
The poll showed that business optimism has fallen to -72 in July 2025, down from -53 in June and lower than the outset of the covid pandemic in April 2020 when it fell to -69.
Ms Leach added: “Last year, damaging speculation around tax rises in the lead-up to the 2024 Budget caused many firms to pause investment and hiring decisions – contributing to six months of near-zero economic growth.
“We’re now living with the economic consequences of those tax hikes, even as uncertainty around future costs once again builds.
“With ripple effects through the economy from tax changes and signs of consumer retrenchment, many firms report that they are struggling to plan amid a cacophony of risk.
“The government must urgently quash rumours of further tax rises for business this autumn, and accelerate planning reforms and de-regulation to restore confidence and drive growth.”
Rachel Reeves blunder as ‘tax hike causes huge hiring slump in London’
Business is concerned by economic volatility, especially as employment costs rise, experts say. (Image: Getty)
New figures released after Rachel Reeves’ tax hike for employers have suggested a slump in hiring activity, as businesses remain “concerned by the volatility of the immediate outlook, especially as employment costs rise”. The latest pulse check of London’s jobs market showed that taking people on for permanent roles across the capital is at its lowest point since the start of the year, and behind the equivalent UK-wide reading, experts said. Vacancies for temporary and permanent roles were also down in May. Job placements “fell sharply” – according to data published by KPMG and the Recruitment and Employment Confederation (REC), supported by BusinessLDN, as the impact of April’s increase in employer national insurance contributions and an uncertain global trading environment hit hiring.
The measure for permanent placements in the city stood at 43.7 in May—any figure above 50 indicates expansion, while any figure below suggests contraction. It marks the lowest reading for indefinite hires across London since January (42.9), with activity in the capital lower than in the UK as a whole (44.2).
London has seen a hiring slump, according to data. (Image: Getty)
Meanwhile, the reading for temporary billings in London (49.6) has been in negative territory for 17 months.
Business London also noted that, as hiring slowed, permanent staff availability (60.6) and temporary staff availability (63.0) have both increased.
However, despite the labour market continuing to cool and staff availability increasing, pay growth for new starters in permanent roles increased to 56.9 in May.
In addition, rates for temporary placements also increased (52.8). Specialists say this may have been driven by robust demand for specialist roles in fast-growing sectors.
Neil Carberry, Chief Executive at the Recruitment and Employment Confederation, said: “Businesses remain cautious. Despite stronger long-term intentions, they are concerned by the volatility of the immediate outlook, especially as employment costs rise.
Rachel Reeves has been told her policies are harming the economy. (Image: Getty)
“As employers adjust to this Spring’s tax rises, that could change.
“This is exactly why clear, supportive sounds and signals from Government and local authorities are so important to unlocking confidence.
“London often feels economic headwinds affecting hiring earlier than other regions, given its exposure to global sectors such as finance, tech, and consultancy, but it is also the place that responds fastest when growth is on the horizon.”
Muniya Barua, Deputy Chief Executive at BusinessLDN, said: “Rising employment costs and global uncertainty have seen firms hit the brakes on hiring.
“The Government should reassure businesses that it won’t bear the brunt of any future tax rises.
Accelerating delivery of shovel-ready projects such as the DLR extension to Thamesmead would also go some way towards tackling London’s housing crisis and boosting growth.”
