UK private sector faces tough months ahead

The latest data from the Confederation of British Industry (CBI) anticipates private sector activity in the UK to continue its steady decline, extending a period of pessimism that began last year.

According to the CBI’s latest Growth Indicator, companies expect activity to fall by 18% in the three months to September. This comes after private sector activity fell in the three months to June 2025, with all sectors broadly affected.

The data shows that business volumes in the services sector are anticipated to decline by 14%, driven by expected falls in both business and professional services (-10%) and consumer services (-31%) volumes.

Distribution sales are expected to fall by 40% in the three months to September, marking the sector’s weakest expectations since September 2022, and manufacturers expect output to fall only by around 5% over the same period.

“While negative expectations for activity have eased a little, our surveys still point to challenging conditions for businesses,” said CBI Deputy Chief Economist Alpesh Paleja.

“Firms cite a very mixed picture on activity: while there are pockets of strength in the economy, it’s clear that sizeable headwinds to growth remain.”

Paleja noted that factors informing UK companies’ negative expectations include higher employment costs, cautious household spending, and global uncertainty.

“The recent volatility in global oil prices is also one to keep an eye on, given its scope to exacerbate costs and inflationary pressure.”

This follows the recent publication of the government’s ten-year Industrial Strategy, which outlines the UK’s broad vision for future growth and investment in the private sector.

“The Industrial Strategy does address some of the more immediate headwinds to growth: notably, delivering competitive energy prices and easing access to talent are steps in the right direction,” Paleja said.

“But firms – particularly those outside of the Strategy’s purview – will be looking for further certainty in the Autumn Budget to boost the UK’s overall competitive edge.”

“This includes further clarity on when business will benefit from greater Growth and Skills Levy flexibility, and business rates reform,” Paleja added.