Data published by the Institute of Chartered Accountants in England and Wales (ICAEW) has revealed that business confidence has fallen to its lowest level in two years.

The ICAEW’s Business Confidence Monitor for the first quarter of 2025 showed that optimism amongst businesses was at -3, the lowest level since the fourth quarter of 2022 and down from 0.2 in the previous quarter.

According to the ICAEW, the fall was attributed to record high tax worries, rising cost pressures and a slowdown in expected domestic sales growth.

Suren Thiru, Economics Director at the ICAEW, said: ‘These figures suggest that this year has so far been a pretty harrowing one for the UK economy as accelerating anxiety over future sales performance, April’s eye-watering tax hike and US tariffs helped push business sentiment into ominous territory.

‘Economic performance was rather unbalanced with improvements in some segments of the economy overshadowed by a torrid quarter for those sectors most vulnerable to these domestic and global headwinds, most notably manufacturers.’