Private sector to shrink at fastest pace since pandemic
Economists warned the 'negative sentiment' had no end in sight, with activity across 'all parts' of the British economy expected to keep shrinking over the next three months, according to the Confederation of British Industry (CBI).
Its latest barometer of private sector output showed businesses were still reeling from the impact of Rachel Reeves's autumn tax raid, with consumer-facing sectors hit hardest by the £25bn increase in employers' National Insurance.
The response to the CBI's business barometer was the most negative since October 2020, when Boris Johnson, the former prime minister announced the second national lockdown during the pandemic.
Bosses were also wary about the impact of global trade policy, even though the UK has escaped with one of the lowest additional tariffs from Donald Trump among major advanced economies.
'The outlook remains negative across the board,' the CBI said, as it warned of a toxic mix of slower growth and higher prices.
'Our surveys also suggest that headcount will be cut further in the three months to October, marking almost a year of weak hiring intentions,' it said.
The decline in July means more businesses have reported a slump in output than an expansion since Labour won the general election in July last year. Expectations about future output have also dragged into negative territory since Ms Reeves's tax raid.
Alpesh Paleja, the CBI's deputy chief economist, said: 'Firms continue to face testing conditions, with expectations pointing to another quarter of falling activity across the economy.
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