London Daily

Focus on the big picture.
Wednesday, Jun 24, 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
UK Biotechnology Sector Receives Increased Public Funding to Support Regional Growth
Police Chiefs Update National Protest Management Guidelines Amid Rising Demonstration Activity
UK Aviation Regulator Expands Support for Regional Airports to Strengthen Domestic Routes
CMA Launches Investigation Into Retail Pricing Across UK Grocery Sector
UK Energy Operator Warns of Winter Supply Pressures Despite Stable Overall Grid Outlook
UK Research Council Expands Funding for Regional Biotechnology and Life Sciences Clusters
UK Compensation Scheme for Post Office Horizon Scandal Reaches 80 Percent Completion
Police Chiefs Issue Updated National Guidance on Managing Large Public Demonstrations
UK Expands Regional Airport Funding Scheme to Boost Domestic Connectivity
UK Competition Watchdog Launches Inquiry Into Grocery Pricing Practices
National Grid Warns of Tight Energy Management Needs During Upcoming Winter Peak Demand
UK Education Department Introduces National Standards for AI Use in Secondary Schools
UK High Court Clears North Sea Carbon Capture Project After Final Legal Challenge Fails
Northern Ireland Leaders Hold Emergency Talks on Trade Disruption Under Windsor Framework
Welsh Government Moves to Expand Social Housing in Response to Severe Affordability Pressures
UK Economy Sees Unexpected Rise in Business Investment in Second Quarter, ONS Data Shows
Scottish Government Unveils Multi-Billion Pound Investment Plan for Renewable Energy and Grid Expansion
UK and EU Agree Enhanced Defence Cooperation Pact Covering Intelligence and North Sea Security
Prime Minister Orders Independent Review of NHS Performance After Record Waiting Lists
Bank of England Holds Interest Rates at 5 Percent as Services Inflation Remains Persistent
UK Heatwave Disrupts Transport, Healthcare and Public Services as Red Weather Alerts Expand Nationwide
Barclays Warns of Growing Cyber Risk Divide Between Large UK Firms and Micro Businesses
European Defence Plans Including Ukraine Integration Prompt UK Strategic Reassessment
UK Equity Markets React as US–Iran Peace Roadmap Eases Oil Price Pressures
United Kingdom Expands Global Clean Energy Partnerships With Brazil, Morocco and Tanzania
Lord David Frost Urges Incoming UK Leadership to Abandon EU Regulatory Reset Strategy
Housing Groups Support Amendment to Strengthen Fire and Gas Safety Access Powers in Social Housing
South London NHS Estates Staff Ballot on Industrial Action Over Pay Structures in Hospital Maintenance Services
United Kingdom Government Invests £60 Million in AI Research Labs at Oxford and University College London
Barclays Cyber Security Report Highlights Rising Threat Exposure Among UK Small Businesses in AI-Driven Attacks
UK Met Office Heatwave Triggers Transport Warnings as Rail Operators Urge Cancellations Amid Infrastructure Strain
South London NHS Estates Workers Ballot for Strike Action Over Pay Disputes Across Major London Hospitals
Barclays Warns of Severe Cyber Security Gap Between Large Corporations and Small Businesses in the United Kingdom
United Kingdom Government Allocates £60 Million for Artificial Intelligence Research Laboratories at Oxford and UCL
National Health Service Approves Teplizumab Treatment to Delay Onset of Type One Diabetes in First European Rollout
Met Office Issues Rare Red Extreme Heat Warning Across London, South East and West Midlands as Transport and Health Systems Face Disruption
Prime Minister Keir Starmer Resigns After Labour Party Revolt Following Economic Stagnation and Local Election Losses
United Kingdom Economy Contracts for Second Consecutive Month as Private Sector Weakens and Job Loss Fears Rise
Taxpayer Support Grows for Higher Digital Levies on Multinational Tech Companies
Bank of England Signals Caution Over Inflation Despite Easing Energy Prices
Lloyds Banking Group Expands Artificial Intelligence Hiring Amid Sector-Wide Automation Shift
Film Producer Corporate Collapse Leaves Creditors Facing Unrecoverable Losses
UK Ten-Year Brexit Anniversary Highlights Ongoing Political and Economic Uncertainty
Nottingham Maternity Scandal Inquiry Reveals Systemic Failings in NHS Care
Met Office Heatwave Prompts Public Health Warnings Across United Kingdom
Concerns Rise Over Fiscal Stability as Political Uncertainty Weighs on UK Borrowing Costs
UK Taxpayers Back Higher Digital Taxes on Global Technology Firms, Survey Shows
Bank of England Holds Interest Rates Steady Amid Persistent Services Inflation
Reform UK and Opposition Leaders Call for General Election Following Starmer’s Departure
Ten Years After Brexit Referendum, UK Faces Ongoing Political Fragmentation and Economic Debate
×