Firms across the UK private sector expect activity to decline over the next three months, extending a negative trend that began in late 2024, according to the Confederation of British Industry’s (CBI) latest Growth Indicator.

The downturn is expected to be widespread, with business volumes in the services sector set to fall (weighted balance of -18%), driven by weak expectations in both business and professional services (-14%) and consumer services (-31%). Distribution sales are expected to contract significantly (-33%), alongside a contraction in manufacturing output (-14%). This follows a slump in private sector activity in the three months to September, with all sub-sectors reporting falling volumes (-32%).

The pessimistic domestic outlook comes as private sector activity fell in the three months to September (-32%). All sub-sectors reported falling activity.

Alpesh Paleja, CBI Deputy Chief Economist, commented on the broader economic picture: “The weakness in private sector activity doesn’t show any signs of letting up and is now expected to persist to the end of this year. The themes cited by businesses paint a, by now, familiar picture: demand conditions are lacklustre, with firms feeling the knock-on impact of cautious spending and investment behaviour across the economy. Wrapped into this, the rise in employer NICs and the National Living Wage continue to bite on bottom lines. And a persistent climate of global economic uncertainty is further hampering decision-making.”

Mr Paleja also noted renewed nervousness surrounding the upcoming November Budget, urging the Chancellor to reaffirm last year’s commitment to no more business tax rises to boost confidence. The UK’s business tax burden is currently near a 25-year high.

Key findings from our monthly Services Sector Survey showed:

Business volumes in the services sector fell in the three months to September (-35%), at a faster pace than in the quarter to August. The latest data marked eleven consecutive rolling quarters of decline.

Both business & professional services (-35%) and consumer services (-34%) volumes fell through the quarter.

Hiring intentions within the services sector remain weak. Business & professional services expect headcount to fall slightly over the next three months (-5%), while consumer services companies expect a sharp fall in numbers employed (-39%).

Selling price expectations in the services sector have accelerated relative to August and stand above the long-run average (+14%, from +9% in August; long-run average +7%). Inflation expectations remain modest for business & professional services firms (+10%) but have picked up for consumer services (+27%).