[LONDON] British businesses turned their most pessimistic in three years at the end of 2025 and their mood worsened after finance minister Rachel Reeves’ budget at the end of November, a survey published on Wednesday showed.
The Institute of Chartered Accountants in England and Wales (ICAEW) said its gauge of business confidence fell to -11.1 in the fourth quarter, its lowest since the end of 2022 and down from -7.3 in third quarter.
Confidence slid across the September-to-December period and fell from -10.7 before Reeves’ budget on November 26 to its final reading 0.4 points lower.
Last week another closely watched survey, the S&P Purchasing Managers’ Index, showed only a marginal rise in business sentiment in December, in contrast to initial estimates of more of a pick-up after budget uncertainty lifted.
Reeves announced £26 billion (S$45.1 billion) of tax increases but delayed most of them and spared employers the kind of hit included in her first budget in 2024 when she raised a payroll tax.
Reeves and Prime Minister Keir Starmer are trying to speed up Britain’s slow pace of economic growth and have said they will create the conditions to boost business investment.
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The ICAEW survey also showed that confidence has fallen for six quarters in a row.
A record 64 per cent of firms said tax was a growing challenge, more than double the share at the time of the 2024 election.
Half of businesses worried about regulation, the highest proportion for more than seven years, reflecting concerns over new employment rights legislation.
Confidence among exporting businesses rose, suggesting domestic issues were behind the overall drop.
Indicators of sales activity in the months ahead improved.
A thousand accountants took part in the telephone survey between Oct 8 and Dec 11. REUTERS
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