A year ago, many businesses were cautiously optimistic about the UK’s economic direction.
But fast forward to today, and that hope has all but vanished.
According to top industry leaders, confidence in the economy has now plunged to its lowest level on record—and they’re placing the blame squarely on Labour’s policies.
New Worries Spark Old Fears
The Institute of Directors (IoD), a leading voice for British business, just released its latest Economic Confidence Index—and the numbers are bleak.
In July, the index nosedived to minus 72, down from minus 53 in June.
That’s not only a steep fall, it’s the worst reading since the survey began back in 2016.
To put that in perspective, the index was sitting at plus 7 just one year ago.
Even during the height of the Covid lockdowns, business owners weren’t feeling this anxious. So, what’s changed?
A Mix of Tax Hikes, Rising Costs and Endless Red Tape
Industry bosses are warning that they’re facing what one called a “cacophony of risk.”
Between rising taxes, tougher employment costs, and more regulation, firms say they’re being squeezed from all sides.
Much of the concern stems from October’s Budget, where the government announced a £25 billion increase in employer national insurance contributions along with a hike in the minimum wage.
Critics argue these moves, while popular politically, have put enormous pressure on businesses—particularly smaller ones.
They claim it’s already having ripple effects: choking growth, driving up prices, and forcing companies to freeze hiring or even cut jobs.
Big Business Voices Join the Chorus
One of the loudest voices warning of trouble is Simon Wolfson, the CEO of retail giant Next.
He said he expects job opportunities in the UK to shrink further this year, blaming the national insurance hikes.
“We believe this will increasingly dampen consumer spending as the year progresses,” Wolfson said, noting that as wages rise and job availability declines, families will tighten their belts—and businesses will feel the pinch.
Firms Beg Labour to End the Uncertainty
Amid the doom and gloom, business leaders are urging Chancellor Rachel Reeves to act—fast.
The IoD wants the government to shut down speculation around any further tax increases this autumn.
Anna Leach, the IoD’s chief economist, explained that even the rumour of new tax hikes has been enough to paralyse investment decisions and hiring plans.
“It’s contributed to six months of near-zero economic growth,” she said.
She added that companies are struggling to plan anything long-term in such an uncertain environment, where policies seem to shift or expand without warning.
Inflation and Joblessness on the Rise
It’s not just business confidence that’s down—the broader economic numbers aren’t looking great either.
The UK currently has the highest inflation rate in the G7 at 3.6%, and unemployment has risen to 4.7%, the highest it’s been in four years.
So while the government has pointed to resilience and recovery, many business owners say that’s not the reality they’re living.
Instead, they’re facing slower sales, tighter margins, and increasing pressure to cut back.
Political Punches and Partisan Frustrations
As expected, the political commentary has been sharp. Conservative business spokesman Andrew Griffith didn’t mince words: “Labour have spent the last year attacking private enterprise with the zeal of a Left-wing student union,” he said, arguing it’s no surprise that business leaders are feeling spooked.
But Labour officials insist they’re striking a balance—trying to support workers while also managing economic recovery.
Still, business leaders say actions speak louder than words—and what they need now is stability, not more speculation or policy swings.
Final Word: Businesses Want Clarity, Not Chaos
Whether you’re a small café owner or the head of a national chain, the message seems consistent: the UK’s business community is rattled.
They’re calling on the government not just to avoid new taxes, but to provide a clear, reliable roadmap for growth.
Because without it, as one executive put it, “how do you plan anything when the rules keep changing?”