#London #United Kingdom #Bain & Company #Transatlantic Confidence Index #BritishAmerican Business

Decline in Confidence: The 2025 Transatlantic Confidence Index

The 2025 Transatlantic Confidence Index, released by BritishAmerican Business (BAB) and Bain & Company, highlights a worrying trend: confidence in the US-UK transatlantic business corridor has plummeted to levels not seen since the index's creation. This year’s Index indicates a notable decline from stable ratings of 7.0 - 7.2 out of 10 to a concerning 6.6, reflecting growing unease among businesses operating within these markets.

The survey, conducted with 75 leading transatlantic corporations, shows UK firms specifically expressing significant worries regarding the US business landscape. Among their concerns are issues related to the United States' trade stance, economic policies, and overall political stability. Conversely, American investors are voicing their apprehension over the UK's growth initiatives and regulatory environment.

Key Findings of the 2025 Index

• - Confidence Drop Across the Board: UK companies reported a decrease in their confidence in the US from an impressive 8.4 last year to 7.5 this year—though still a healthy level, it represents the lowest score recorded since the index began. The average score regarding the US's handling of economic policies was rated a mere 5.4 out of 10, with a significant portion of respondents scoring it a 6 or lower.
• - Worries about Predictability: UK investors are particularly worried about critical areas, especially relating to trade agreements and policy predictability. Nearly 75% of respondents emphasized the importance of a clear, collaborative trade approach from the US government.
• - US Firms Call for Changes: After tracking a steady confidence rating of 6.6 in 2024 regarding the UK's investment climate, US businesses have reported declining sentiment, now at 6.3. Contributing factors include perceived heavy taxation, escalating energy costs, and increasing regulatory burdens.

Despite these challenges, US firms note improvements in political stability within the UK, with nearly half of the American businesses surveyed planning to expand their investments in the UK, which still remains appealing due to its market size and potential for innovation. However, this growth agenda is fraught with demands for a more business-friendly regulatory environment, reflecting a desire for more supportive practices that can bolster competitiveness.

The State of the UK-EU Relationship

Interestingly, US firms have shown improved confidence in the UK-EU relationship, marking its highest score since Brexit at 6.6 out of 10. Nevertheless, this signifies a downward shift in priority ranking among US businesses, indicating that while relations have strengthened, they still seek increased engagement and cooperative strategies from the UK government, especially in trade matters.

Cautious Optimism Amidst Concerns

Despite deteriorating overall confidence, leaders from BAB express cautious optimism. Duncan Edwards OBE, the CEO of BritishAmerican Business, noted that while the drop in sentiment is concerning, the ongoing Economic Prosperity Deal provides grounds for potential recovery. This deal aims at enhancing bilateral trade and investment, potentially reinforcing positive perceptions if implemented effectively.

Bain & Company's Jonathan Frick echoed this sentiment, observing that while confidence may have dipped, there is evidence that businesses remain committed to cross-border growth, underscoring the enduring strengths of the US market. He emphasized the need for regulatory clarity to foster a conducive investment landscape on both sides of the Atlantic.

Conclusion

As the transatlantic business environment faces heightened scrutiny, it is essential for both governments to recognize and address the growing concerns of investors. The findings from this year’s Transatlantic Confidence Index serve as a crucial reminder that while the foundation for transatlantic investment remains strong, there is an urgent need for clarity and cooperation in policy to restore and uplift confidence among businesses on both sides. The future of the US-UK corridor hinges on decisive actions that promote a collaborative economic framework, paving the way for mutual growth and long-term success.