Business optimism in the UK has dropped to its lowest level since the COVID-19 pandemic, according to the Institute of Directors (IoD). The decline follows tax increases introduced in finance

minister Rachel Reeves' first budget on October 30.

In November, investment plans and hiring intentions among IoD members fell to their weakest levels since May 2020. A measure of business leaders' confidence plunged to -65, down from -52 in October, marking the lowest reading since April 2020.

"Confidence has continued to nosedive as businesses grapple with the implications of the Budget on their plans," said Anna Leach, the IoD’s Chief Economist. She criticized the measures, stating, "Instead of strengthening the foundations, the Budget has eroded them, hindering the private sector's capacity to invest in both their operations and workforce."

The IoD’s findings add to widespread concerns from businesses about the Budget, amid broader signs of an economic slowdown.

Last week, Reeves assured the Confederation of British Industry that she would avoid further tax hikes or increased borrowing in future budgets. However, the Budget introduced £40 billion ($51 billion) in tax increases, including a £25 billion rise in employers’ social security contributions.

Before the general election, Labour had estimated around £8 billion in tax hikes, but Reeves attributed the larger figure to what she described as a worse-than-expected fiscal situation inherited from the previous Conservative government.

Additional measures, such as proposed tighter employment laws, are also expected to increase costs for employers, according to the IoD.

The survey, conducted between November 15 and 27, gathered responses from 601 members, predominantly small businesses. Photo by © User:Colin / Wikimedia Commons /