UK Expected to See Decline in Business Activity

UK businesses are on track for their weakest quarter since 2020.

UK Businesses Face Steep Decline in Economic Activity

According to the Confederation of British Industry, British private sector activity is projected to drop to -18% in the third quarter of 2023. This downturn follows a steep decline of -26% recorded in the previous three months. Companies are grappling with high employment costs and diminished consumer spending, amidst rising global uncertainty. Alpesh Paleja, deputy chief economist at the CBI, noted that firms are seeking clarity in upcoming government measures to enhance competitiveness. In contrast, household liquid assets rose by £8.8 billion in June, indicating families are conserving funds as prices increase.

The expected drop in business activity signals wider economic challenges for the UK. Increased employment costs and cautious consumer behavior have led to a bleak outlook for many companies. The government’s ability to respond effectively in the upcoming Autumn Budget will be vital in restoring confidence among businesses. As households tighten spending, the potential for economic recovery seems uncertain, raising alarms for future growth amidst prevailing inflation.

Highlights

The path forward for UK businesses hangs in the balance as they await governmental direction.