Firms across the private sector expect activity to fall modestly in the three months to November (weighted balance of -15%), extending a run of negative predictions that began in late 2024, according to the CBI’s latest Growth Indicator.
The downturn is expected to be broad-based, with business volumes in the services sector set to decline (-15%), driven by weak expectations in business & professional services (-13%) and consumer services (-22%).
Distribution sales (-19%) and manufacturing output are also set to contract (-13%). Nonetheless, expectations across most sectors are less weak than those seen in the first half of the year.
The fragile outlook comes as private sector activity fell in the three months to August (-26%) in what has been a difficult year overall for UK businesses. All sub-sectors reported falling activity.
Commenting on the data, Alpesh Paleja (CBI Deputy Chief Economist) noted that the outlook remains subdued across the private sector, as businesses continue to grapple with sluggish demand, higher employment costs, increasing uncertainty, and squeezed margins.
However, expectations for activity are less negative than in the first half of the year, which is a thin silver lining.
“Even so, there’s little evidence yet of a meaningful turnaround, and firms are increasingly focusing on building resilience and efficiency as they navigate a challenging economic environment – at the expense of capital spending and longer-term growth ambitions.
Paleja noted that firms are already shouldering the cost of the government’s fiscal decisions.
“The Autumn Budget must not add to that strain with further tax rises that risk undermining investment and growth. If the government wants to unlock growth, it must cut the cost of doing business, give firms tax certainty, deliver further flexibility to the Growth and Skills Levy, and rethink the Employment Rights Bill.”
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