Rachel Reeves has crushed confidence in Britain

It doesn’t look like the Chancellor will hit her target for turning the UK into the fastest-growing economy in the G7. Nor has ‘stability’ unlocked a wave of foreign investment. Instead, it has plunged. As for Rachel Reeves’s fiscal rules, they have been missed almost every month since they were announced. Now there is more bad news for the Chancellor. Business confidence has collapsed to an all-time low.

Leaving the EU’s single market was tough for Britain; so was the financial crash of 2008 and 2009. The pandemic, too, was never going to make business owners feel good about life. But still, 2025 is looking like our country’s economic nadir. According to a survey by the Institute of Directors released today, business sentiment dropped to minus 72 in July, a steep drop from an already very gloomy minus 53 a month earlier. It is the lowest reading on the survey since it started in 2016, and even worse than during the Covid crisis. Almost 85 per cent of the 900 business leaders surveyed said they ‘lack confidence in the government to jump-start the economy’. More than two-thirds said they believed the government’s policies on the economy have been ‘very unsuccessful’ to date. There may be one or two entrepreneurs out there feeling good about their prospects – perhaps a guy selling spare parts for windmills in Sunderland – but everyone else is suicidal.

It is not hard to work out why the mood is so bad. Companies have already been hammered with one round of tax and more and higher levies are almost certainly on the way in the autumn. Entrepreneurs face higher capital gains taxes and possibly a wealth tax as well. Expanding has become not just more expensive, but more difficult too. Employers must adhere to a whole raft of new employment rights.

Rachel Reeves has never seemed to understand that a good chancellor is a good storyteller. He or she needs to inspire, and to persuade people that even if times are tough, they will get better soon. Relentlessly talking down the economy has been a huge mistake – and Reeves is about to pay a high price for it.