Middle East conflict drives economic confidence to new record low

02 Apr 2026

Business leader optimism over prospects for the UK economy is at a record low after the outbreak of war in the Middle East, according to the Institute of Directors (IoD).

The IoD Directors' Economic Confidence Index fell to its lowest ever reading of -76 in March 2026, from -63 in February.

Business leader confidence in their own organisations also fell, to -2 in March from +1 in February.

In addition, 71% of business leaders are concerned about geopolitical tensions affecting investment, markets or business partners while 69% are concerned about energy price volatility.

Anna Leach, Chief Economist at the IoD, said: 'The outbreak of conflict in the Middle East has driven down the confidence of business leaders to a new record low.

'Across all sectors, the general increase in uncertainty is once again delaying decision-making, as many wait to see how the conflict evolves. Financial conditions are reported to have tightened, with investors pulling out of deals.

'The government is right to be alert to the risks of another cost shock to the economy and has been agile in giving vital support to households exposed to heating oil costs. But it should avoid framing price increases as profiteering when many businesses are facing genuine and significant cost pressures from energy, logistics and supply chain disruption.'