London Daily

Focus on the big picture.
Friday, Sep 25, 2026

UK service sector records fastest decline in activity since January 2021

UK service sector records fastest decline in activity since January 2021

A closely-watched survey shows a severe slowing in the service sector in October due to political uncertainty, making the possibility of the UK entering recession likely.

The downturn in the economy has worsened this month as the service sector recorded the fastest decline in activity since January 2021, according to the closely-watched S&P Global / CIPS Flash UK Purchasing Managers Index (PMI).

The survey of 650 manufacturers and 650 service providers showed that growth was lower than expected and was at a level not seen since the financial crash, if the months of the pandemic are excluded.

Scores below 50 on the index indicate economic contraction.


While a score of 48 was expected, a score of 45 was recorded for UK manufacturing output, a 29-month low.

Economic contraction was recorded across multiple categories. A 21-month low on the index was recorded for both the PMI business activity index and the composite output index.

The data showed the pace of economic decline gained pace due to "recent political and financial market upheavals", according to Chris Williamson, chief business economist at S&P global market intelligence.

"The heightened political and economic uncertainty has caused business activity to fall at a rate not seen since the global financial crisis in 2009 if pandemic lockdown months are excluded."

As a result, recession is likely, he said. "GDP therefore looks certain to fall in the fourth quarter after a likely third quarter contraction, meaning the UK is in recession."

The survey showed business confidence had fallen to a level "rarely seen before in 25 years of survey history", he added.

"As night follows day, investment and employment will suffer in the months ahead as companies adjust to the increasingly challenging environment. Hiring is already slowing sharply, with manufacturing now even shedding workers."

Inflation remained higher than at any time in the survey's history prior to the pandemic. Despite reduced consumer demand the weak pound and high energy costs the inflationary pressure "look set to drive the Bank of England into further aggressive interest rate hikes", Mr Williamson said, which will increase borrowing costs.

"On top of the collapse in political stability, financial market stress and slump in confidence, these higher borrowing costs will add to speculation of a worryingly deep UK recession."

Newsletter

Related Articles

0:00
0:00
Close
Vistry Cuts Profit Outlook as Losses Deepen and Private Home Sales Weaken
Reported Assaults on Great Britain’s Railways Rise Sharply
Far-Right Activist Daniel Thomas Arrested After Channel Dinghy Slashing
Ukrainians in Britain Face Greater Homelessness Risk as Host Payments Are Cut
Scottish Drug Deaths Rise as Synthetic Opioids Spread
UK Diesel Prices Approach Record High as Energy Costs Intensify
UK Food and Drink Trade Deficit Widens to Record £21 Billion
Britain’s Largest Planned AI Supercomputer Delayed by Power Grid Constraints
NHS Boards Impose Minimum Waits of Up to Two Years for ADHD and Autism Assessments
Police Arrest Far-Right Activist After Migrant Dinghy Slashed in English Channel
Synthetic Opioids Drive Renewed Rise in Scotland’s Drug Deaths
Reported Assaults on Britain’s Railways Rise 20% in a Year
Vistry Cuts Profit Forecast as Losses Weigh on UK Housebuilder
TikTok Drops Appeal and Accepts £12.7 Million UK Data Protection Fine
Russell Group Urges UK Government to Drop Proposed International Student Levy
Legal & General Plans to Cut 1,000 Jobs by Mid-2027
UK Health Bill Would Remove Independent Governors From NHS Foundation Trusts
BMA Raises Patient Safety Concerns Over Advanced Practitioners Filling Doctor Rotas
UK’s Largest AI Supercomputer Delayed by Power Supply Constraints
NHS Orders Security Cameras in Neonatal Units Following Thirlwall Inquiry
Post-Brexit Trade Barriers Cost UK Economy Up to £6.5 Billion a Year, Analysis Says
UK Parliament Launches Inquiry Into Bank of England Monetary Policy Independence
Global Bond Selloff and Higher Oil Prices Narrow UK Budget Options
UK Prime Minister Andy Burnham Addresses UN and Holds First Meeting With Donald Trump
Royal Navy Commandos Complete Maritime Operations Training With US Navy SEALs
Vistry Profit Warning Adds to Concerns Over UK Housebuilding Conditions
UK Commits £343 Million to Major Expansion of Community Mental Health Services
Five Eyes Partners Back UK-Led Campaign Against Global Fraud Networks
UK Businesses Gain Full Access to £13 Trillion CPTPP Trading Bloc
UK Allocates Nearly £10 Billion for Council, Social and Affordable Housing
Chancellor John Healey Unveils Deregulation Drive to Accelerate UK Investment and Growth
Prime Minister Andy Burnham Sets Out Post-Brexit Foreign Policy Vision at United Nations
UK Reassesses Chagos Arrangements as Burnham Seeks New Path on Diego Garcia
Key Trends to Watch
Government’s “Buy British” Procurement Push Targets More Domestic Jobs and Industrial Capacity
Scotland Launches Four-Year Flood Resilience Programme With New Community Funding
Low-Income Renters Face Record Gap Between Housing Support and Private Rents
UK and US Test Torpedo Launch From British Undersea Drone in Defence Technology Milestone
Britain Pushes Artificial Intelligence Security Onto United Nations Security Council Agenda
Treasury Committee Defends Office for Budget Responsibility Independence Amid Fiscal Pressure
Scotland Records Eleven Per Cent Rise in Drug-Use Deaths as Cocaine and Nitazenes Drive Concern
Welsh Government Sets Four-Year Programme Around Health, Living Costs, Jobs and Housing
Study Finds Most People With High Blood Pressure in England Remain Undiagnosed
Britain Plans First National Workplace Health System to Tackle Economic Inactivity
England to Introduce Vocational GCSEs in Major Secondary Education Reform
UK Elevates Climate and Nature Risks to National Security Priority
Andy Burnham and Donald Trump Put Trade at Centre of First Major Bilateral Meeting
Andy Burnham and Ursula von der Leyen Push Ahead With Closer UK-European Union Economic Ties
UK Government Borrowing Jumps to Eighteen Point Three Billion Pounds Ahead of October Budget
Piddington Residents Back Symbolic Independence Vote Over Asylum Accommodation Plan
×