Business Outlook: The Institute of Directors Economic Confidence Index suggests underlying economic measures were either stable or worsened in December compared with directly before the November Budget, with employers preparing to lay off more staff as higher payroll costs from taxes and red tape impact headcount expectations.
Anna Leach, Chief Economist at the Institute of Directors, concludes:
After months of policy uncertainty at the end of last year, it’s a relief to see business leaders were feeling a little more positive about the economic outlook…But this needs to be kept in perspective: the December improvement still leaves confidence around the record lows reached in the first Covid lockdown, and after the last two Budgets…there is good reason to think that the policy environment could become less volatile in the year ahead….The potential for less policy uncertainty will not be enough to materially improve the UK’s economic fortunes. Hiring freezes remain widespread, amidst concern over further cost increases in the latest Budget and the direction of travel for the Employment Rights Bill. Investment continues to be postponed or cancelled as companies conserve cash. When asked about the factors that would have the greatest impact on business confidence in 2026, top of the list were a lower tax burden and scaling back the proposed changes to employment law.
Read the full press release here> IoD press release: Confidence improves in December, but hiring and investment remain under pressure | IoD
