I’m pleased to share my summary of business sentiment in the East of England from the latest ICAEW Business Confidence Monitor (BCM) quarterly results. The Q3 2025 research highlights a challenging environment for businesses across the UK, with the East of England reflecting many of the same pressures seen nationally.
UK business confidence falls to new lows
The national BCM index dropped for the fifth consecutive quarter, falling further into negative territory to -7.3 in Q3 2025. This is the lowest level since late 2022, driven by persistent concerns over the tax burden, above-average inflation, and weak domestic and export sales growth.
Notably, 60% of businesses now cite tax as a major challenge (a record high) while regulatory worries are at their highest in nearly seven years. Employment growth has slowed to its weakest rate in four years and capital investment growth is at a two-year low.
View from the East: Sentiment edges up but remains subdued
In the East of England, the survey index improved slightly in Q3, rising from -4.8 to -3.9. However, confidence remains in negative territory and well below the region’s historical average (+4.3). Despite this, sentiment in our region is less pessimistic than the UK average (-7.3).
Key findings of interest:
- Annual domestic sales growth slowed sharply to 2.2%, below both the region’s historical average (3.1%) and the national average (3.0%). Export growth also weakened, with both indicators expected to remain below UK averages in the coming year
- Profits growth fell to a four-year low, reflecting margin pressures from rising costs and subdued demand
- Employment growth dropped to its lowest rate since Q2 2021, as labour demand cooled further
- The outlook for capital expenditure and R&D budgets is weak, with growth expected to lag the national average over the next year
- While input prices, selling prices, and salary inflation all softened compared to the previous quarter, they remain elevated by historical standards
- The tax burden remains the top concern for businesses in the East, followed by regulatory pressures and increased competition.
Sector trends and outlook
The slowdown in domestic sales is particularly linked to weaker performance in the region’s important Business Services and Property sectors. Despite these headwinds, some businesses remain cautiously optimistic about future sales and exports, anticipating some improvement as global uncertainty eases (fingers crossed!).
My reflections on the recent Budget statement
Chancellor Rachel Reeves’ Autumn Budget statement on 26 November did not deliver significant relief for businesses in the East of England. Businesses will continue to endure a high tax burden, increased regulatory requirements, and limited new support for investment; meaning they will need to remain resilient and adaptable in the face of ongoing uncertainty.
In response, we’re seeing business leaders take a cautious approach, reviewing cash flow forecasts, seeking advice from their accountant, and scenario-planning for when changes to tax thresholds and reliefs take effect. PEM has put together a timeline of the changes so you can plan ahead.
As always please talk to me and my colleagues to discuss how all of this could affect you and how best to navigate these choppy waters over the months and years ahead.
If you would like to know more about the findings, you can view the latest BCM 2025 Q3 report for the East of England on the ICAEW website.
