Business confidence declines as operating conditions worsen

06 Jul 2026

The confidence of the UK's business leaders dropped during May as operating conditions continued to deteriorate, according to research conducted by the Institute of Directors (IoD).

The IoD Directors' Economic Confidence Index dropped to -61 in June 2026 from -53 in May, signalling a deterioration in economic sentiment.

This was matched by a marked fall in confidence in respondents' own organisations, down to +7 from +23 in May.

Supply chain concerns persisted, with 43% of business leaders saying that they were concerned about shortages affecting their operations due to the conflict in the Middle East, albeit down from 52% in April.

Anna Leach, Chief Economist at the IoD, said: 'Four fifths of businesses now report that business disruption and economic uncertainty are becoming normalised. As well as easing back on investment and hiring, this is pushing businesses to prioritise resilience over expansion, maintain higher reserves, reduce discretionary spend, diversify their supply chains and enhance their risk management.

'As we face into yet another refresh of the government's priorities for growth, the need to create a supportive environment is becoming more acute. While there is a logic to changes in the machinery of government, what matters is delivery on the ground.

'Businesses need to see meaningful improvements in areas like regulatory cost, tax complexity and swiftness and consistency of government decisions to fundamentally unlock spending and get growth going.'