Business confidence really matters because it shapes decisions. When businesses aren’t clear about what’s coming next, they pause. They delay investment in equipment, technology, recruitment and expansion — and when that happens, the entire economy slows down.

We’re seeing exactly that across the country right now.

A clear example we’ve been raising recently is housebuilding. Activity has cooled significantly: new-build completions in England fell 19% year-on-year in Q2 2025, and planning approvals for new homes are at their lowest level since 2014. Construction output is contracting too — the July PMI dropped to 44.3, the sharpest decline since May 2020.

Under normal circumstances, when housebuilding slows, renovation work picks up the slack. But this time, it hasn’t. During the pandemic, households invested heavily in improving their homes and gardens. That burst of spending happened five or six years ago, and it isn’t repeating now.

As a result, the construction sector and its supply chain — builders, plumbers, electricians, timber merchants and many others — are taking a double hit:
1️⃣ fewer house sales because buyers want clarity on interest rates and stamp duty, and
2️⃣ no corresponding uplift in renovation spending to offset the slowdown.

Taking a wider view, this uncertainty seeps into everything: slower recruitment, frozen pay rises and more cautious decision-making across firms. It affects us all.

For the housing market to function properly, buyers need confidence:
• in their jobs,
• in their cost of living,
• that interest rates are stable and likely to fall, and
• that if they buy a home, its value will rise — without government capturing too much of that uplift through constant tax changes.

A temporary stamp duty cut or holiday would help stimulate activity. Meanwhile, punitive taxes on landlords and higher stamp duty for buy-to-let investors discourage people from providing homes to a rental market that is already under immense pressure.

On the supply side, the planning system and the accumulation of local impact charges and environmental levies — often around 20% before a foundation is even poured — place huge burdens on developers. These costs directly feed into why homes are so expensive.

Unless confidence returns and the economy picks up, we will see more developers and construction firms go under — reducing the industry’s capacity just when the country needs more homes, not fewer.

Consumers are no different. Growth ultimately comes from businesses becoming more efficient and selling more, alongside consumers spending with confidence. But people only spend when they believe their circumstances — jobs, costs, taxes and borrowing rates — won’t change suddenly or dramatically. Confidence is the fuel of an economy; without it, people sit tight.

That’s why this Budget matters. What businesses and consumers need right now is stability.

We’ve already had weeks of waiting for fiscal announcements. The Budget arrives next week, followed immediately by the run-up to Christmas. In practice, that means four to five months of delayed decisions. Growth nudged up last quarter, but I don’t expect the same this quarter.

We also didn’t used to have two full Budgets a year. The Autumn Statement was never meant to become a second Budget but that’s effectively what it is now. And every time one comes around, businesses press pause because they’re unsure what’s about to change. This should be a reset and a refocus to keep the economy on track, not a wholesale shift that paralyses decision-making for months.

If we want the economy to grow, we need businesses to feel able to grow. And for that, the most valuable thing government can provide right now is a period of calm — space for the dust to settle and confidence to rebuild.

If we want businesses to grow, consumers need to feel secure. And if we want consumers to feel secure, businesses need a stable environment they can plan in. Confidence connects the two and stability is what makes that confidence possible.