Revised survey information point out that the UK’s non-public sector economic system scraped solely marginal development final month, prompting recent warnings that circumstances are verging on stagnation.
The ultimate composite buying managers’ index (PMI) from S&P World, protecting each manufacturing and companies, slipped to 50.8 in November from 52 the earlier month, hitting its weakest degree in over a 12 months.
The brand new studying, although subdued, got here in stronger than an earlier “flash” estimate of 49.9, suggesting that UK output didn’t contract in spite of everything. Any determine above 50 signifies that financial exercise is increasing. Rob Wooden, chief UK economist at Pantheon Macroeconomics, welcomed the upward revision, noting that it provided a measure of encouragement.
However, the info underscore deepening uncertainty throughout British enterprise. Corporations reported mounting issues over the coverage measures launched within the autumn funds, together with increased taxes and rising employment prices. Rachel Reeves, the Chancellor, added 1.2 proportion factors to employers’ nationwide insurance coverage contributions in October, a £25 billion tax improve on UK firms. She additionally lifted the minimal wage and tightened employees’ rights, adjustments that many companies say will weigh on hiring and wage selections.
Tim Moore, economics director at S&P World Market Intelligence, mentioned: “Worries about the impact of policies announced in the autumn budget, in particular those pushing up employment costs, were widely reported as leading to a gloomier assessment of business investment prospects and the broader UK economic outlook.”
Corporations within the companies sector had been particularly downbeat, recording their most pessimistic outlook since late 2022. Rising payroll prices, together with the dearer nationwide insurance coverage contributions, have dented shopper demand and led firms to reduce initiatives.
In the meantime, producers struggled to carry their floor. The manufacturing PMI fell to 48 in November from 49.9, effectively under the impartial 50-mark, whereas the companies PMI eased to 50.8 from 52, its slowest tempo of development in over a 12 months. Moore added: “Weaker sales pipelines, cutbacks to new projects and more caution among clients were all cited as having an adverse impact on service sector output.”
Though the Financial institution of England has lowered rates of interest to 4.75 per cent, borrowing prices stay traditionally excessive. This elevated charge setting, coupled with rising prices for necessities, has squeezed family funds and subdued enterprise funding. The end result, analysts say, is a fragile economic system on the cusp of reversing course if uncertainty and price pressures proceed to mount.
