Ongoing policy uncertainty, high inflation and global supply chain pressures continue to weigh on UK business sentiment, according to Dun and Bradstreet’s latest UK Business Optimism Insights report.

The UK Business Optimism Index fell by a further 1.0% in Q2 2025, extending the sharp decline recorded in the previous quarter. Sub-indices tracking financial confidence and supply chain continuity saw steeper drops, falling 23.2% and 23.7% respectively. Mid-sized firms reported the greatest supply chain disruption, with optimism down 44.6%.

Investment confidence also declined, with the relevant index falling 8.3% as businesses reassessed plans in light of sustained cost pressures and a subdued economic outlook. Sentiment dropped most in utilities, food and beverage manufacturing, and capital goods.

The ESG index slipped 8.7% quarter-on-quarter, reflecting a slowdown in social and governance activity, though long-term engagement remained stable.

“Businesses are continuing to adapt to a volatile environment marked by high input costs, uncertain monetary policy and shifting global trade dynamics,” said Edgar Randall, UK managing director at Dun and Bradstreet. “While confidence has softened, the firms best placed to navigate ongoing disruption will be those actively strengthening financial resilience and planning across multiple scenarios.”

Bankruptcies remained above pre-pandemic levels, particularly in construction, hospitality and business services, despite a year-on-year decline.

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