Tuesday 30 September 2025 5:48 am
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Business confidence is at a three-year low and productivity has not improved for 15 years. It is businesses that policymakers must turn to – and fast – to get growth back on track, writes ICAEW chief executive Alan Vallance 

Whatever your political leanings, we can all agree that the UK faces a challenging economic context. Weak global demand, persistent inflation and high borrowing costs are squeezing households and businesses alike. Productivity – the biggest driver of higher output and rising living standards – hasn’t improved for 15 years. With public finances under huge pressure, none of the options open to the Chancellor in November’s Budget are particularly palatable; it is obvious that the government faces tough choices about where and how to prioritise limited resources. 

The key to unlocking this challenge is growth. Government and business are united on this. Yet while ministers rightly talk about the need for a growing economy and how it is the government’s central objective, the reality is that on a daily basis businesses are finding the prospects for growth really tough. 

At ICAEW, we see this better than anyone. Our 170,000 members don’t just understand the economy – they shape it: 84 per cent of FTSE 100 boards have an ICAEW member at the table; 3m businesses across the UK are advised by our members every day – from the smallest start-ups to our largest global firms. And I see great examples every day of fantastic British companies – providing excellent goods and services to their customers, providing jobs in every community, selling British excellence around the world and innovating better than any other economy on earth.  

However, firms across the country contend with rising costs, skills shortages and too much red tape. These challenges make it far harder to plan for the future or to invest with confidence. 

Business confidence at a three-year low 

For two decades, our Business Confidence Monitor has tracked business sentiment. The message from our most recent survey was stark: confidence is at a three-year low. In London, business confidence declined for the fourth consecutive quarter in Q2 2025 – more than any other region – slumping into negative territory for the first time in two years. April’s rise in employer’s National Insurance Contributions has been a major concern for businesses in the capital, with the proportion of firms citing the tax burden as a growing challenge, reaching a survey-record high of 57 per cent in Q2 2025. 

There is much to be confident about the opportunities for UK businesses and their strengths to meet those opportunities. We can be in the top tier of world economies in the 21st century with growing living standards. But you would have to be an ostrich not to recognise the lack of confidence throughout businesses.   

The confidence reading is a stark reminder of the perilous situation facing businesses, who cannot be the cornerstone of growth without an environment that enables them to thrive; prosperity will remain a pipe dream and further pain is inevitable. 

Put simply, for too long it has been too difficult, too expensive and too uncertain to do business in Britain. 

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And yet, if the UK economy is to turn the corner, it is business that will drive investment, create jobs and raise living standards. That means business must be given what it needs to succeed. 

A little less conversation, a little more action (please) 

With party conferences underway and a Budget looming, now is the time for action. Policymakers must walk the walk on growth – and quickly. 

That means giving businesses the certainty of knowing there won’t be further tax rises around the corner, which is why we’re calling for the government to commit to no business tax increases this Parliament. Businesses will be the driver of growth and higher prosperity – don’t kill that off. 

We’re calling for the government to commit to no business tax increases this Parliament. Businesses will be the driver of growth and higher prosperity – don’t kill that off

But it also means giving businesses the confidence that an overly complex system will be made easier; and the encouragement that barriers to growth will be removed and investment incentivised. 

In that context we welcome the government’s recent announcement on business rates. It’s a step in the right direction and shows recognition of the need for reform of the system to incentivise growth. 

But, further radical change is needed, so we want to see business rates replaced with a pro-growth and productivity system that incentivises the improvement of business premises and encourages investment in green infrastructure. 

As chartered accountants, that is the advice we would give to anyone managing the public purse. 

And in that spirit – of independent, evidence-based advice that can help solve problems – we encourage all policymakers to listen carefully to what business is telling them. Because without successful businesses, there will be no growth. 

Alan Vallance is chief executive of ICAEW

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