The Institute of Directors (IoD) has reported that business confidence in the UK remains muted, reflecting ongoing concerns about both domestic and international developments. Despite some anticipation around key policy changes, many enterprises appear wary of making significant investments or growth decisions until greater clarity emerges.
Commentators note that the current environment has been shaped by multiple factors, including policy shifts tied to the so-called “Liberation Day” and continued repercussions from global trade disputes. Some economists say that tariff measures introduced by the United States, combined with existing economic headwinds, have contributed to a more cautious stance among British firms.
The IoD Directors’ Economic Confidence Index, which measures business leader optimism in prospects for the UK economy, rose slightly to -58 in March 2025 from -64 in February.
Anna Leach, Chief Economist at the Institute of Directors, said:
“The confidence of business leaders across the UK remained depressed in March, with this month’s improvement still leaving the index around Covid pandemic lows. With the NICs and minimum wage increases now coming into effect, headcount and investment intentions remain well below the average of the last decade, albeit a little higher than they were. And business leaders are highly concerned about costs – with three-quarters saying that employment costs are the biggest cost driver they face.”
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