UK faces ‘stagflation’ warning amid rising costs, jobs cuts and faltering growth The UK's private sector has seen a modest uptick in the early part of the year, but business sentiment continues to decline with looming job cuts and escalating inflation, according to a survey of firms.
Chris Williamson, S&P Global Market Intelligence's chief business economist, said: "The first indicators of business conditions in 2025 add to the gloom about the UK economy, with companies cutting employment amid falling sales and concerns about business prospects.
These preliminary figures, which come after Chancellor Rachel Reeves' decision to hike employment taxes for companies in the October Budget, will likely fuel worries about sluggish economic growth and a softening job market.
Economists are warning over potential "stagflation" in the UK, where inflation is on the rise but economic growth and employment remain stagnant.
However, firms are still grappling with rising costs, with input cost inflation reaching its highest point since May 2023, and business confidence has dipped for the sixth month in a row.
