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.

Business leader confidence in their own organisations also rose slightly to +5, from +2 in February.

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.

Business leader confidence in their own organisations also rose slightly to +5, from +2 in February.

In terms of underlying indicators, cost expectations remained at +87, the same as February, which was the highest figure on record. When asked what was driving this outlook for the year ahead, business leaders indicated that the biggest factor was labour costs (including taxes) at 77%, followed by supply chain inflation (36%) and energy costs (34%).

With the exception of export expectations, which dropped from +7 in February to +5 in March, other underlying indicators have increased:

• Headcount expectations rose from -16 to -4.
• Investment intentions rose from -18 to -8.
• Wage expectations rose +38 to +49.
• Revenue expectations rose from +14 to +15.

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.

“The Spring Statement is now behind us and we breathe a sigh of relief that there were no nasty surprises.  With global trade uncertainty elevated ahead of “Liberation day”, inflationary pressures up, and financial markets highly reactive, the pressures on growth show no signs of easing. But the OBR brought some hope in finding that planning reforms will pay off for growth in the longer term. The forthcoming Spending Review and accompanying Industrial Strategy represent key opportunities for the government to reinforce growth-positive policy measures, particularly through prioritising major infrastructure projects and de-regulation. But there is still work to be done to ensure that the costs of employment do not impede the UK’s growth ambitions.”

With the exception of export expectations, which dropped from +7 in February to +5 in March, other underlying indicators have increased:

• Headcount expectations rose from -16 to -4.
• Investment intentions rose from -18 to -8.
• Wage expectations rose +38 to +49.
• Revenue expectations rose from +14 to +15.

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.

“The Spring Statement is now behind us and we breathe a sigh of relief that there were no nasty surprises.  With global trade uncertainty elevated ahead of “Liberation day”, inflationary pressures up, and financial markets highly reactive, the pressures on growth show no signs of easing. But the OBR brought some hope in finding that planning reforms will pay off for growth in the longer term. The forthcoming Spending Review and accompanying Industrial Strategy represent key opportunities for the government to reinforce growth-positive policy measures, particularly through prioritising major infrastructure projects and de-regulation. But there is still work to be done to ensure that the costs of employment do not impede the UK’s growth ambitions.”