The Institute of Chartered Accountants in England and Wales (ICAEW) Business Confidence Monitor (BCM) for Q2 2025 has revealed a decline in UK business confidence, with the index dropping to -4.2, its weakest reading since Q4 2022.
The survey of business leaders found that high tax worries, weakening economic conditions, and growing global volatility have contributed to the decline.
Confidence among exporters has dipped into “negative territory” for the first time since 2022, with a score of -6.1, amid US tariffs and growing geopolitical instability.
The tax burden was cited as a growing challenge by 55% of businesses, nearly matching the prior quarter’s peak of 56%.
ICAEW members are concerned about the rise in employers’ national insurance and potential further tax rises in the Autumn Budget.
Expectations for domestic and export sales growth have declined to five-year lows, with domestic sales growth expected at 4.1% and export sales growth at 3.5%.
To prevent the decline in confidence from becoming terminal, ICAEW has urged the Chancellor to spare businesses from additional tax hikes in the Autumn Budget.
Employment growth expectations for the year ahead fell to their “lowest level” for almost five years, decreasing to 1.3%.
Salary growth has eased to 3% year-on-year, and businesses expect wage growth in the next 12 months to be 2.4%.
Selling price inflation is expected to ease, with businesses expecting price growth over the next 12 months to be 2%.
ICAEW chief executive Alan Vallance said: “This negative confidence reading is another stark reminder of the perilous situation facing businesses as they continue to grapple with major tax worries at home and an increasingly bleak global picture. A cocktail of costs, including the national insurance rise and global instability, has made life especially difficult for businesses across the country, particularly exporters.”
“Businesses are the cornerstone of growth, but without an environment that allows them to thrive, further pain is inevitable. Unless the Chancellor spares business from additional tax hikes in the Autumn Budget, economic prosperity will remain a pipe dream.
“As we move into the season of Budget speculation, it’s imperative that the government learns from the past year. Constant rumours will only serve to destabilise businesses, so we urge the government to be honest about their plans, to give companies the opportunity to plan ahead and weather the storm.”
A recent report from ICAEW also suggested that private equity investment is increasingly influencing the UK accountancy profession.
