Despite global uncertainty over trade, and UK fears over the costs of last October’s Budget and employment rights reform, business optimism has risen to its highest level since September 2024.
The Institute of Directors’ Economic Confidence Index rose for the second month in a row, from -58 in March 2025 to -51 in April – the highest since September 2024 (-38).
Business leader confidence in their own organisations also improved from +5 in March to +13 in April. Most of the underlying indicators also saw a modest improvement in April.
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Headcount expectations recovered for the second month running from -4 to +3, the first positive reading since September 2024 (+6), although still significantly down on the year (+20 in April 2024). However, wage expectations fell back a little from +49 to +43 (+57 in April 2024).
Investment intentions rose for a second consecutive month from -8 to -5, but likewise remained sharply down on the year (+21 in April 2024).
Cost expectations declined for the second month in a row from +87 to +83, but remained up on the year (+76 in April 2024).
Export expectations rose from +5 to +8 (+14 in April 2024).
Anna Leach, chief economist at the Institute of Directors, said President Trump’s tariff delay was partly a cause of renewed optimism. She said: “The IoD’s headline confidence measure moved to its highest level since before the Budget, while investment, headcount and cost expectations all improved for a second month running. The most prominent areas of concern were uncertainty arising from US tariff policy, which is both slowing down and scaling down contracts, alongside the sharp rise in costs following last year’s Budget.”
She added there was a “strong sense of frustration among business leaders that the government has been quick to raise their costs, but slow to deliver policies which will support them to grow their businesses. The government is right to focus on public sector efficiency, but this needs to improve the pace of growth-friendly policy delivery as well as deliver value for money. Businesses would welcome quicker progress on the de-regulatory drive as well as actions to address other barriers to growth – including energy and employment costs – which would free up resource to invest and grow.”
To sustain optimism, rapid action on skills shortages was needed as far as Recruitment and Employment Confederation (REC) deputy chief executive Kate Shoesmith, was concerned. She said: “Rising headcount, investment, and export expectations signal a long-awaited upturn, hinting the economy is finally emerging from the woods in 2025. But deep-rooted challenges such as high-cost pressures, softening wage and revenue forecasts, and long-term issues like skills shortages and poor infrastructure, still demand urgent government action to solidify this trajectory. This recovery must drive a broader, sustained push to fix the economy’s structural flaws.”
The IoD results differed from those of the latest Business Barometer from Bank of Scotland. Although the barometer found that confidence was higher than at the beginning of the year, it fell 10 points in April to 39%.
Firms’ optimism in their own trading prospects dropped seven points to 50%, said BoS while their confidence in the wider economy fell 13 points to 28%.
North-east England was the most confident UK nation or region in April (59%), followed by the West Midlands (53%) and the north-west (52%).
Hann-Ju Ho, senior economist at Lloyds Commercial Banking, said: “With the announcement of global tariffs from the US on 2 April and the market volatility that followed, it is unsurprising that business confidence saw an impact this month.
“However, economic optimism remains higher than at the beginning of the year, showing businesses’ resilience in the face of recent challenges and overall confidence is still well above the long-term average of 29%, an average taken from over 20 years of analysis.”
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