One of the major themes of ICAEW’s growth campaign is how uncertainty for businesses can be tackled in order to improve business sentiment and hence the appetite of businesses to invest. 

Our chart this week highlights how business confidence as measured by the ICAEW Business Confidence Monitor (BCM) Index rose from +6.1 in the second quarter 2023 to +16.7 a year later, before crashing over the past year to -4.2 in Q2 2025. 

The +6.1 score in Q2 2023 was a significant improvement over the -20.1 registered half a year earlier in Q4 2022 at the height of the cost-of-living crisis. It was also better than the +4.1 pre-pandemic average and +5.0 overall average measured by the BCM Index. 

As the chart shows, the index declined in Q3 2023 by -3.2 (to 2.9) but then rose by 1.3 in Q4 2023 (to 4.2), by 10.2 in Q1 2024 (to 14.4), and by a further 2.3 in the second quarter of 2024 to reach a peak of 16.7 following the general election and the consequent change in government.

Unfortunately, business sentiment has declined rapidly over the past year, with the BCM Index falling by 2.3 in Q3 2024 (back to 14.4) and by a huge 14.2 in the fourth quarter last year (to 0.2, only just positive). The index turned negative this year with a decline of 3.2 in Q1 2025 (to -3.0) and then a further fall of 1.2 in Q2 2025 to reach a score of -4.2 in the most recent calendar quarter.

According to the BCM commentary, the business sentiment score of -4.2 in Q2 2025 marked a fourth consecutive decline during a period of heightened global uncertainty and weakening UK activity. Confidence among exporters was particularly downbeat, falling into negative territory for the first time in almost three years. 

Domestic sales growth had slowed during the second quarter and businesses had lowered their expectations about domestic and exports sales for the coming year. Concerns about customer demand and competition in the marketplace had risen sharply, while regulatory requirements continued to be the second biggest challenge for businesses.

The tax burden remained the greatest growing challenge in Q2 2025, with the reported rate close to the survey high, and these concerns rose to new record highs in some key sectors.

Expectations for employment growth in the year ahead dropped to the lowest level since Q3 2020, but businesses expected salary growth to continue to ease, adding to the more positive outlook for inflationary pressures than reported in the previous quarter.

Confidence declined in most sectors surveyed and sentiment remained highly unequal, with confidence most negative in manufacturing and engineering, and retail and wholesale; and most positive in information and communication, and construction.

More detail about business confidence by sector and by regions is available in the ICAEW Business Confidence Monitor section of the ICAEW website.

More detail on how it is too difficult, expensive and uncertain to do business in the UK, and ICAEW’s call for the government to do what it can to streamline regulations, reduce unnecessary costs, and provide businesses with the confidence that they need to invest, is available on ICAEW’s growth campaign.