Business confidence in the UK has climbed to its highest level since before last autumn’s budget, buoyed by President Trump’s decision to delay the full implementation of his reciprocal tariff regime, according to the latest survey from the Institute of Directors (IoD).
The organisation’s economic confidence index rose from -58 in March to -51 in April, reaching its highest point since September 2024. The findings are based on a poll of 648 business leaders conducted between 11 and 29 April.
The IoD said business leaders had begun increasing recruitment and investment plans for the second consecutive month, with expectations around rising costs also beginning to ease.
The data suggests that uncertainty surrounding US trade policy — particularly Trump’s aggressive new tariff strategy — has weighed more heavily on sentiment than the domestic tax rises introduced in Chancellor Rachel Reeves’s October budget.
From April 6, national insurance contributions for employers rose from 13.8% to 15%, alongside a lower threshold for payments and a 6.7% rise in the national minimum wage. These changes triggered a sharp drop in business sentiment last autumn, a trend worsened earlier this year by Trump’s unexpectedly steep tariff plan, announced on 2 April and now delayed by 90 days.
Anna Leach, chief economist at the IoD, said: “The overall mood among business leaders improved in April as the worst of the tariffs from the States were paused for 90 days. 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.”
Leach added that many businesses remain frustrated at the lack of support from Westminster: “There’s 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 mixed signals in the economy continue to complicate the outlook. While official GDP data from the Office for National Statistics showed stronger-than-expected 0.5% growth in February, the more recent composite purchasing managers’ index (PMI) for April signalled that private sector activity slowed at its fastest rate in 29 months.
In a further sign of caution, the International Monetary Fund downgraded its UK growth forecast for 2025 to 1.1%, down from 1.6% earlier this year, citing weak productivity and the potential global impact of US trade policy.
For now, the temporary pause in Trump’s tariffs appears to have lifted some of the immediate gloom — but with the 90-day countdown already ticking, business confidence may be short-lived without further clarity on both international trade and domestic economic policy.
