UK Business Activity Slows Amid Economic Uncertainty, PMI Shows

What's Happening?

The UK business activity grew at its slowest pace in five months in September 2025, according to the S&P Global Purchasing Managers' Index (PMI). The services sector PMI fell to 50.8, its lowest since April, indicating a near-stagnation in growth. The composite PMI, which includes manufacturing, was revised down to 50.1. The slowdown is attributed to companies and consumers delaying spending decisions due to anticipated tax rises in the upcoming November budget. The economic uncertainty has led to a cautious approach in both corporate and household spending.

Why It's Important?

The slowdown in business activity reflects broader economic challenges facing the UK, including political and economic uncertainty. The potential tax increases in the November budget could further impact consumer and business confidence, affecting spending and investment. This situation poses risks to economic growth and could influence monetary policy decisions by the Bank of England. The data suggests a potential shift in the labor market, with services businesses cutting jobs and experiencing slower cost increases. These developments could have long-term implications for the UK's economic stability and growth prospects.

What's Next?

Finance Minister Rachel Reeves is expected to present the budget on November 26, which may include tax hikes or spending cuts. The outcome of the budget will be crucial in determining the economic trajectory and could influence business and consumer confidence. The Bank of England's policy decisions will also be closely watched, as they balance inflation concerns with the need to support economic growth. Businesses and consumers will likely remain cautious until the budget details are revealed, impacting economic activity in the short term.