Highlights
- Services sector optimism falls to -50
- Chancellor's £26 bn tax increase blamed for adding business costs.
- Business sentiment remains near record lows despite marginal post-budget uptick.
The CBI's optimism index for services firms plummeted to -50 in the three months to November, down sharply from -29 in August. This marks the steepest decline, reflecting growing anxiety among business owners.
The organisation surveyed 398 firms between October (28) and November (13), capturing sentiment both before and after chancellor Rachel Reeves unveiled her autumn budget on November (26). The budget outlined £26 bn in tax rises, equivalent to approximately $34 bn.
Charlotte Dendy, a CBI official, warned that the budget measures would further strain businesses. "Last week's Budget will add further costs to businesses, while also hampering business investment and profitability," she told Reuters.
She highlighted concerns about national insurance contributions being added to salary sacrifice pension contributions and the government's failure to address high business energy costs.
The CBI's services volume indicator also declined, falling to -38 from -30 in the previous quarter, suggesting reduced business activity alongside weakening confidence.
Separate data from the Institute of Directors (IoD), released the same day, showed business sentiment improved only slightly following the budget.
The IoD survey, conducted between 14 and 26 November among firms where two-thirds employ fewer than 50 people, recorded sentiment at -72 compared to -73 before the budget announcement.
The figures paint a challenging picture for Britain's services sector, which forms a substantial part of the UK economy. Businesses are navigating a difficult environment marked by persistent cost pressures and uncertainty about future profitability.
