London Daily

Focus on the big picture.
Sunday, Nov 01, 2026

UK economy 'running on empty' as recession signals mount - PMI

UK economy 'running on empty' as recession signals mount - PMI

Britain's economy is showing signs of stalling as high inflation hits new orders and businesses report levels of concern that normally herald a recession, a closely watched industry survey showed on Thursday.

S&P Global's Purchasing Managers' Index (PMI), covering services and manufacturing firms, also showed companies raising pay and passing higher costs on to clients, a worry for the Bank of England.

The PMI's preliminary composite index held at 53.1 in June, above the median forecast of 52.6 in a Reuters poll of economists and unchanged from May.

But its measure of new orders fell to 50.8, the lowest in over a year. Factory orders dipped below the 50.0 growth threshold to 49.6.

"The economy is starting to look like it is running on empty," Chris Williamson, chief business economist at S&P Global Market Intelligence, said.

"Business confidence has now slumped to a level which has in the past typically signalled an imminent recession," he said, adding that the economy was likely to show a fall in output in the second quarter that could deepen in the third quarter.

Economies around the world are struggling with similar problems and sterling rose against the euro after a similar survey showed a sharp slowdown in business growth in the single currency area, and the pound recovered some of its earlier losses against the U.S. dollar.

Some analysts said the report, while not yet reflecting the full impact of the cost-of-living crisis, provided a bit of hope that a recession might be avoided.

"For now, the survey offers some reason to think the economy could be a little more resilient than we thought," Nicholas Farr, an economist at consultancy Capital Economics, said.

But others worried about the signs of demand growth petering out and the still high inflation pressures.

Samuel Tombs at Pantheon Macroeconomics said he continued to expect Britain's economy would shrink in the April-June period, albeit partly due to an additional public holiday.

"We still are content with our forecast for a 0.7% quarter-on-quarter decline in GDP in Q2 and only a partial recovery in Q3," he wrote in a note to clients.

The PMI's business expectations index fell by 4.6 points in June, the largest monthly decline since the start of the COVID-19 pandemic, with manufacturers and service providers both reporting their lowest business optimism levels since May 2020.

Separate data showed the limits on finance minister Rishi Sunak for spending more money or cutting taxes to stimulate the economy, as rising inflation-linked debt interest costs pushed the public finances deeper into the red than expected in May.

Inflation is also hitting spending by consumers and figures from the Confederation of British Industry showed retailers - who are not included in the PMI surveys - were feeling the hit this month.

The PMI's measure of job creation was the strongest in three months, in the latest sign of the strength in the labour market.

But employers reported difficulty finding staff and pay levels rose. That helped keep increases in prices charged by firms near two-decade highs.

Companies across the board felt the need to pass on higher energy, fuel and wage costs to customers, S&P Global said.

The BoE is worried that the recent jump in inflation to a 40-year high of 9.1% in May might turn into a permanent problem for the British economy. It said last week it was ready to act "forcefully" if it saw signs of persistent inflation pressures.

Newsletter

Related Articles

0:00
0:00
Close
Home Office Expands Border Security Operations and Intelligence Sharing With European Partners
Office for National Statistics Reports Modest Retail Sales Growth Ahead of Crucial Christmas Trading Season
Welsh Government Unveils Strategic Plan to Boost Regional Technology Innovation and Digital Skills Training
Department for Environment Food and Rural Affairs Implements New Agricultural Subsidies Framework for English Farmers
Scottish First Minister John Swinney Announces Major Regional Infrastructure and Green Energy Investment Strategy
National Health Service Leaders Warn of Severe Winter Pressures and Mounting Accident and Emergency Backlogs
Bank of England Monetary Policy Committee Signals Cautious Interest Rate Path Amid Persistent Services Inflation
Chancellor of the Exchequer Rachel Reeves Finalizes Autumn Budget Framework Aiming to Close Public Sector Fiscal Gap
Department for Science, Innovation and Technology Prepares Enhanced Artificial Intelligence Safety and Cyber Defense Frameworks
United Kingdom Government Expands International Sanctions Framework Against Russian Shadow Fleet and Financial Enablers
Institute of Directors Reports Sharp Post-Budget Drop in Business Confidence Despite Long-Term Investment Intention Shifts
Chancellor John Healey Defends Sweeping Fiscal Adjustments and Household Support Packages Following Autumn Budget
Parliamentary Petitions Committee Schedules Major Legislative Debates on Special Educational Needs and Non-Stun Meat Labelling
Regional Devolution and Good Growth Fund Frameworks Reshape Local Government Funding Across English Regions
Loughborough University Economic Analysts Highlight Substantial Uncertainty Surrounding Public Sector Efficiency Savings
British Legal Sector Drives Sixty Billion Pounds in Annual Economic Output While Employing Over Half a Million Professionals
Law Society Welcomes New Better Regulation Executive While Pressing for Long-Term Legal Aid Funding Reform
Metropolitan Police and Security Services Heighten Operations Across London Ahead of Large-Scale Public Demonstrations
Bank of England Economists Scrutinize Corporate Tax Adjustments and Public Sector Borrowing Pressures
Chancellor John Healey Defends Autumn Budget Tax and Spending Allocations Following Intense Parliamentary Scrutiny
Department for Environment, Food and Rural Affairs Implements Strict Water Quality Monitoring Rules Following Severe Rainfall and Flooding
Welsh Government Unveils Comprehensive Regional Housing Strategy to Address Rural Affordability and Homelessness Pressures in Cardiff
Office for National Statistics Reports Slowing Consumer Price Inflation and Steady Retail Performance Across United Kingdom Markets
Northern Ireland First Minister Michelle O'Neill and Deputy First Minister Emma Little-Pengelly Advance Cross-Border Infrastructure Agreement in Belfast
Competition and Markets Authority Launches Formal Investigation Into Artificial Intelligence Partnerships Involving Major Technology Corporations
Scottish First Minister John Swinney Secures Cross-Party Support for Devolved Budget Framework and Renewable Energy Expansion
High Court Rules in Favor of Environmental Campaigners Over Department for Energy Security and Net Zero Licensing Procedures
National Health Service England Announces Major Digital Modernization and Artificial Intelligence Diagnostic Rollout Across Regional Trusts
Bank of England Monetary Policy Committee Signals Cautious Approach to Interest Rate Cuts Amid Persistent Wage Growth and Inflation Pressures
British Prime Minister Keir Starmer and Chancellor Rachel Reeves Outline Strategic Infrastructure Plans to Boost Regional Growth and Private Investment
Water pollution remains high despite £5bn investment
Regional Economic Divergence and Industrial Transformation
Technological Sovereignty and Regulatory Scrutiny
Fiscal Consolidation and Public Service Pressures
Automotive Industry Leadership Warns of Imminent Supply Chain Disruptions Following Recent European Trade Negotiations
High Court Delivers Landmark Ruling Affirming Strict Legal Protections for Corporate Data Privacy Against State Surveillance
Welsh First Minister Eluned Morgan Secures Additional Funding for Regional Transport Infrastructure and Rail Modernization
Scottish First Minister John Swinney Announces Major Green Energy Infrastructure Investment Package for Aberdeen
Department for Work and Pensions Proposes Sweeping Welfare Reforms to Incentivize Long-Term Unemployed Back into Work
Competition and Markets Authority Launches Formal Investigation into Artificial Intelligence Partnerships Involving Major Tech Giants
United Kingdom Foreign Secretary David Lammy Concludes High-Level Strategic Talks in Washington on Middle East Security
National Health Service England Unveils Emergency Winter Resilience Plan to Combat Projected Surge in Emergency Admissions
Bank of England Governor Andrew Bailey Signals Cautious Approach to Interest Rate Cuts Amid Persistent Inflation
British Chancellor Rachel Reeves Finalizes Corporate Tax Overhaul Ahead of Autumn Budget to Fund Public Services
Automotive Manufacturers Urge Government Action as High Energy Costs and Global Supply Chain Disruptions Threaten Production
Metropolitan Police Issue Formal Apology Following Inadvertent Release of Confidential Information During High-Profile Investigation
Scottish Finance Secretary Shona Robison Unveils Devolved Budget Highlighting Housing and Public Service Adjustments
Energy Regulator Office of Gas and Electricity Markets Prepares to Remove Household Gas Standing Charges Following Treasury Mandate
Treasury Confirms Reversal of Planned Cash Individual Savings Account Allowance Reduction Protecting Twenty Thousand Pound Limit
Office for Budget Responsibility Revisions Predict Moderate United Kingdom Economic Growth with Elevated Inflation Pressures
×