UK private sector sentiment sinks as firms predict deeper downturn

UK private-sector firms expect activity to decline over the next three months, extending a run of negative forecasts that began in late 2024, according to the Confederation of British Industry's (CBI) latest Growth Indicator.

Firms across the private sector once again expect activity to fall in the next three months, with the weighted balance standing at minus 27 per cent.

The downturn is predicted to be widespread. Distribution businesses expect weaker sales, with a minus 26 per cent outlook, while manufacturing firms anticipate a minus 30 per cent fall in output — the sector’s gloomiest projection in almost a year.

The pessimistic forecasts follow an already challenging period. Private-sector activity fell sharply in the three months to November, registering a minus 35 per cent balance, the fastest decline since August 2020. All major sub-sectors reported contractions, signalling broad-based weakness heading into the new year.

“Businesses tell us that much of the month passed in limbo ahead of that, with big discretionary spending and investment on hold. However, this only compounded the headwinds to growth that have been apparent throughout the year: cautious spending behaviour by households and clients making demand conditions tepid, against a backdrop of persistent cost pressures for corporates,” said Alpesh Paleja, CBI deputy chief economist.

“The government must now leverage enterprise expertise to unlock economic growth. This starts by applying the effective model of compromise and partnership achieved on the Employment Rights Bill, by collaborating directly with business to boost growth,” Paleja added.

ALCHEMPro News Desk (HU)