Business confidence in the UK experienced a significant uplift in January 2026, with the Institute of Directors’ (IoD) Economic Confidence Index showing a notable jump. This rebound signals a more optimistic outlook among business leaders for both the wider economy and their own organisations, following a period of weakness.
Key takeaways
- The IoD Directors’ Economic Confidence Index rose to -48 in January from -66 in December.
- Confidence in individual organisations improved to +14 from -4.
- Revenue and export expectations saw their highest figures since September and July 2024, respectively.
- Despite improvements, headcount and investment intentions remain in negative territory.
Economic confidence sees a welcome rise
The IoD Directors’ Economic Confidence Index, which gauges business leader optimism about the UK economy over the next 12 months, climbed to -48 in January 2026, a marked improvement from -66 in December 2025. This suggests a growing sense of positivity among directors regarding the economic landscape.
Improved sentiment within organisations
Confidence in the prospects of individual businesses also saw a substantial increase, moving from -4 in December to +14 in January. This indicates that business leaders are feeling more optimistic about their own company’s performance and future.
Underlying indicators show strength
Several key underlying indicators within the survey also demonstrated significant improvement:
- Revenue expectations: Rose to +23 from +8, reaching the highest point since September 2024.
- Export expectations: Increased to +11 from +5, the best performance since July 2024.
- Headcount expectations: Improved to -2 from -14, the highest level since October 2025.
- Investment intentions: Saw an increase to -5 from -21, marking the highest figure since May 2025.
Conversely, cost expectations saw a marginal decrease, moving from +84 to +81.
Cautious optimism prevails
Anna Leach, Chief Economist at the Institute of Directors, commented on the findings, noting the "fairly chunky" rise in confidence. She highlighted the across-the-board improvement in economic measures, particularly in revenue expectations and investment plans. However, Leach cautioned that while headcount and investment plans have improved, they still remain in negative territory. This suggests that businesses are stabilising revenues and general conditions but are not yet ready to significantly increase capital or labour costs.
Leach also pointed to the ongoing challenge of rising business costs, which continue to clash with government support packages. She stressed the need for government policy to focus on driving growth, including addressing risks to employment from the Employment Rights Act and accelerating efforts to remove regulatory barriers.
Sources
- IoD press release: Business confidence jumps in January, Institute of Directors.
