UK business confidence has fallen to its lowest level in over two years, according to new data from the Institute of Chartered Accountants in England and Wales (ICAEW), as rising tax pressures and escalating global trade tensions take their toll on corporate sentiment.
In its latest quarterly survey of 1,000 chartered accountants, the ICAEW reported that its Business Confidence Index dropped to -3 for the first quarter of 2025—down from 0.2 in the final quarter of last year, and the weakest reading since late 2022. The findings reflect mounting anxiety over operating costs, slowing sales, and the economic fallout from President Donald Trump’s tariff-led trade war.
“These figures suggest that this year has so far been a pretty harrowing one for the UK economy,” said Suren Thiru, Economics Director at the ICAEW. “Accelerating anxiety over future sales performance, April’s eye-watering tax hike and US tariffs helped push business sentiment into ominous territory.”
The survey revealed a significant shift in business priorities, with 56 per cent of respondents citing rising taxes—particularly the increase in employer National Insurance contributions (NICs) introduced by Chancellor Rachel Reeves—as a growing concern. That marks the highest level of tax-related anxiety recorded since the survey began in 2004.
Reeves’s £40 billion tax-raising Autumn Budget, which came into force on 6 April, has fuelled fears that increased costs will curb investment, hiring and consumer confidence.
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