Sharp fall in UK business activity forecast as economic gloom deepens
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CBI survey finds firms planning to reduce hiring amid weakest expectations for growth since November 2022. British firms are predicting a sharp fall in business activity in the new year, in the latest economic snapshot to warn of an increasingly gloomy outlook for the UK in 2025.
The growth indicator survey from the Confederation of British Industry (CBI) indicates firms are preparing to cut down on hiring and reduce output over the next three months. Businesses are trying to cushion the blow from Rachel Reeves’ decision in her October budget to raise £25bn by raising employers’ national insurance contributions (NICs).
While the chancellor has said the money is necessary to plug a “black hole” in the public finances left by her predecessors, she has conceded it may mean lower wage increases, while others have argued it will cost jobs. The CBI said the NICs increase had exacerbated “an already tepid demand environment”.
The poll of 899 companies between 25 November and 12 December found expectations for growth were at their weakest since November 2022, in the chaotic aftermath of Liz Truss’s short term as prime minister. The pessimism was wide-ranging, with the service sector expecting a decline in activity and manufacturers expecting output to fall sharply in the three months to March 2025.
Separate data published on Monday suggests retailers face a further blow in the new year. Consumer spending forecasts have fallen by six points, according to the British Retail Consortium, hitting nearly every retail category. “If these expectations are realised, retailers could find themselves facing a new year spending squeeze just as they unveil their January sales,” said the BRC chief executive, Helen Dickinson.
