November 28, 2024 at 01:03AM
The CBI survey shows UK services sector sentiment falling at its fastest pace in two years, driven partly by tax increases in Finance Minister Rachel Reeves’ October 30 budget, according to the Confederation of British Industry (CBI).
The decline is most severe in consumer services, where a £25 billion payroll tax hike heavily impacts large employers.
Sentiment among consumer services firms dropped sharply to -55 in November from -19 in August, while business and professional services fell to -29 from +9.
CBI Deputy Chief Economist Alpesh Paleja attributes the drop in optimism, weaker hiring intentions, and rising cost pressures to the forthcoming increase in employer National Insurance Contributions. Profitability among business and professional services firms fell to its lowest since August 2020, and investment intentions have declined across the board.
Low business investment, already a factor in Britain’s weaker productivity compared to international peers, has worsened. The CBI’s findings align with other indicators, including the S&P Global PMI, which showed economic contraction for the first time in over a year. The survey, based on responses from 441 firms between October 29 and November 14, highlights growing economic challenges in the UK.
This article was written by Eamonn Sheridan at www.forexlive.com.
