UK Services Optimism Falls at Fastest Pace in Three Years, CBI Warns
Business confidence plunges as rising costs and new tax measures tighten pressure on Britain’s services sector
Optimism across Britain’s services sector fell at its sharpest rate in three years during the three months to November, according to new data from the Confederation of British Industry.
The CBI’s latest survey shows its services-sector optimism index dropping to –50, down from –29 in August, as firms continue to face steep cost pressures that have eroded profitability and weighed on activity.
The decline comes just days after finance minister Rachel Reeves unveiled an annual budget on November 26, outlining £26 billion in tax increases.
The measures, which include national insurance contributions being applied to salary-sacrifice pension arrangements and no relief from high business-energy costs, are expected to place further strain on companies rather than spark a turnaround in sentiment.
Charlotte Dendy of the CBI said the Budget risks “adding further costs to businesses” and may hinder investment at a moment when margins are already squeezed.
According to the survey, services-sector volumes also deteriorated, with the index falling to –38 from –30 in August as firms reported weakening demand and continued cost inflation.
A separate survey released by the Institute of Directors reinforced the subdued outlook.
Conducted between November 14 and 26, the IoD’s confidence measure ticked up only marginally to –72 — just one point above pre-Budget levels.
With two-thirds of respondents employing fewer than fifty people, the results suggest that smaller firms remain particularly vulnerable to rising taxes, persistent energy costs and uncertainty surrounding the wider economic environment.
Together, the surveys point to deepening concerns across the UK’s service-driven economy, where fragile demand and ongoing cost pressures threaten to curb investment, hiring and growth well into the new year.
The CBI’s latest survey shows its services-sector optimism index dropping to –50, down from –29 in August, as firms continue to face steep cost pressures that have eroded profitability and weighed on activity.
The decline comes just days after finance minister Rachel Reeves unveiled an annual budget on November 26, outlining £26 billion in tax increases.
The measures, which include national insurance contributions being applied to salary-sacrifice pension arrangements and no relief from high business-energy costs, are expected to place further strain on companies rather than spark a turnaround in sentiment.
Charlotte Dendy of the CBI said the Budget risks “adding further costs to businesses” and may hinder investment at a moment when margins are already squeezed.
According to the survey, services-sector volumes also deteriorated, with the index falling to –38 from –30 in August as firms reported weakening demand and continued cost inflation.
A separate survey released by the Institute of Directors reinforced the subdued outlook.
Conducted between November 14 and 26, the IoD’s confidence measure ticked up only marginally to –72 — just one point above pre-Budget levels.
With two-thirds of respondents employing fewer than fifty people, the results suggest that smaller firms remain particularly vulnerable to rising taxes, persistent energy costs and uncertainty surrounding the wider economic environment.
Together, the surveys point to deepening concerns across the UK’s service-driven economy, where fragile demand and ongoing cost pressures threaten to curb investment, hiring and growth well into the new year.
