WIREDGOV

Firms across the private sector expect activity to fall in the next three months (weighted balance of -25%), according to the CBI’s latest Growth Indicator. Notably, expectations are at their weakest since December 2025, and the latest data extends a period of negative predictions for growth that began in late 2024.

Business volumes in the services sector are anticipated to fall (-22%), driven by expected declines in consumer services volumes (-15%) and business & professional services (-24%), with expectations in the latter deteriorating somewhat further. Distribution sales are expected to decline sharply (-41%) and manufacturers anticipate a modest fall in volumes over the next three months (-20%) – marking the weakest predictions here since November 2025.

The subdued outlook comes as private sector activity fell in the three months to April (-24%). All sub-sectors reported falling activity.

Alpesh Paleja, CBI Deputy Chief Economist, said:

“Business’ expectations for activity have weakened further, as companies continue to grapple with uneven trading conditions, strong cost pressures and renewed uncertainty.

“These challenges have been exacerbated by the conflict in the Middle East, which is increasingly hitting a broad swathe of UK businesses. Our surveys suggest that the additional pressure on costs and supply chains is feeding through to pricing intentions – but not nearly enough to offset the burden facing firms.

“While recent action on energy costs, including the BICS extension, is welcome, firms continue to face a mounting burden from structural cost pressures that pre-date the Middle East conflict.

“Mitigating a further weakening of business sentiment requires the government to work with business to find appropriate landing zones on the Employment Rights Act, delivering meaningful reform of a business rates system that is holding back investment, and further exploring how to take additional policy costs off business energy bills. Doing so will help businesses reinvest, scale and drive economic growth.”

Key findings from our monthly Services Sector Survey showed:

• Business volumes in the services sector fell in the three months to April (-18%), at a slower pace than in March.

• Both business & professional services (-16%), and consumer services (-28%) volumes fell through the quarter, at a slower pace relative to March.

• Hiring intentions within the services sector remained negative (-21%), extending the trend seen since late 2024. Business & professional services expect headcount to be cut modestly (-13%) in the three months to July, while consumer services expect a comparatively faster reduction (-34%).

• Selling price expectations in the services sector remained elevated (+30%) and stand at their strongest since January 2025. This reflects above average expectations for both business & professional services (+22%) and consumer services (+58%) firms. Inflation expectations for consumer services are now at their strongest since January 2023.