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UK firms report record low business confidence

New data reveals UK business leaders are increasingly pessimistic about the economy under Rachel Reeves.

August 1, 2025 at 05:00 AM

UK firms’ confidence hits ‘record low’ as Rachel Reeves slammed

Recent findings show UK firms are increasingly pessimistic about the economy under Rachel Reeves.

UK business confidence plummets amid criticism of Rachel Reeves

Business confidence in the UK has fallen to a record low, largely attributed to dissatisfaction with Chancellor Rachel Reeves’ tax policies. A recent Institute of Directors survey indicates that the confidence of business leaders has dropped by 19 percentage points in July. Many firms now project negative business prospects, reversing gains seen just a month prior. Influenced by higher operational costs and uncertainties about taxation, the majority of business owners do not believe current government efforts will foster growth. Shadow Business Secretary Andrew Griffith expressed that this decline in sentiment reflects the government's ongoing struggle to support private enterprise effectively.

Key Takeaways

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Business confidence in the UK hits an all-time low according to the Institute of Directors.

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Chancellor Rachel Reeves faces criticism for tax hikes affecting business sentiment.

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The net balance for pessimism among directors deepened significantly in July.

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Confidence in export expectations has also turned negative after a period of optimism.

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Only 9 percent of businesses believe government policies will enhance growth.

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Calls for urgent tax reform are emphasized by many business leaders to boost confidence.

"We’re now living with the economic consequences of those tax hikes, even as uncertainty builds."

Anna Leach highlights the ongoing impact of tax policies on businesses.

"The Chancellor seems determined to release a sequel to a bad horror movie franchise."

Andrew Griffith criticizes the government's approach to business taxes.

"Just nine percent of business owners believe government policy will be successful in driving growth."

The strong skepticism of business leaders toward government measures is evident in the survey results.

"Many firms report that they are struggling to plan amid a cacophony of risk."

Leach points out the challenges businesses face in making strategic decisions amidst uncertainty.

The decline in business confidence marks a significant shift in the UK's economic climate. The juxtaposition between the positive perceptions highlighted by Lloyds Bank and the stark realities outlined by the Institute of Directors unveils a deeper disconnect within the business community. In an environment where financial pressures mount due to looming tax hikes, firms are not only reconsidering their investments but fearing layoffs. Given the current trajectory, it appears the government's strategy may need a fundamental rethink to regain trust from the business sector.

Highlights

Tax hikes are fueling uncertainty in UK businesses.
Confidence is faltering as firms face higher costs.
Businesses want urgent action on taxation and red tape.
Many firms feel paralyzed by economic risk and uncertainty.

Concerns over business confidence and tax policies

The decline in business confidence poses risks for the UK economy, potentially leading to decreased investment and job losses. Firms are concerned about the implications of ongoing tax hikes and regulatory burdens on their operations.

The future of UK's business environment remains uncertain as firms seek immediate government action.

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uk politics business confidence economy rachel reeves tax policies politics economy business

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