UK Services Sector Confidence Plunges at Fastest Pace in Three Years, CBI Warns
Profit pressures and recent tax increases dent morale across British service firms ahead of festive season
Optimism in Britain’s services sector collapsed at its sharpest rate in three years in the three months to November, according to the latest survey by the Confederation of British Industry.
The headline services-sector optimism index dropped to –50 from –29 in August, as firms struggled with rising costs and squeezed profitability.
The survey comes shortly after the government’s Autumn Budget, which imposed £26 billion of new taxes.
The CBI cautioned that the Budget’s added costs — including new national insurance charges on salary-sacrificed pension contributions and no relief on high business energy bills — are unlikely to revive confidence among firms in the near term.
Service-sector volumes fell alongside confidence, with the CBI’s volume index slipping to –38 from –30, signalling a contraction in activity.
Many firms reported weak demand and shrinking margins, pointing to further cutbacks in hiring and investment.
A parallel survey from the Institute of Directors found only a marginal uptick in sentiment after the Budget; confidence remained near historic lows, reflecting ongoing unease among businesses about the economic outlook and the burden of new taxes and costs.
The combined data underscore growing concern that Britain’s service-driven economy may enter a prolonged period of weak growth if cost pressures and tax burdens persist without offsetting support or structural reforms.
As UK consumers face rising living costs and firms delay expansion, the CBI urged policymakers to consider measures to ease energy and labour costs and support investment, to prevent further deterioration in business sentiment and safeguard service-sector stability in the coming months.
The headline services-sector optimism index dropped to –50 from –29 in August, as firms struggled with rising costs and squeezed profitability.
The survey comes shortly after the government’s Autumn Budget, which imposed £26 billion of new taxes.
The CBI cautioned that the Budget’s added costs — including new national insurance charges on salary-sacrificed pension contributions and no relief on high business energy bills — are unlikely to revive confidence among firms in the near term.
Service-sector volumes fell alongside confidence, with the CBI’s volume index slipping to –38 from –30, signalling a contraction in activity.
Many firms reported weak demand and shrinking margins, pointing to further cutbacks in hiring and investment.
A parallel survey from the Institute of Directors found only a marginal uptick in sentiment after the Budget; confidence remained near historic lows, reflecting ongoing unease among businesses about the economic outlook and the burden of new taxes and costs.
The combined data underscore growing concern that Britain’s service-driven economy may enter a prolonged period of weak growth if cost pressures and tax burdens persist without offsetting support or structural reforms.
As UK consumers face rising living costs and firms delay expansion, the CBI urged policymakers to consider measures to ease energy and labour costs and support investment, to prevent further deterioration in business sentiment and safeguard service-sector stability in the coming months.
