According to two separate business surveys, the uncertainty surrounding Labour’s first budget since 2010 is weighing heavily on the economy. Data from S&P Global revealed a second consecutive monthly slowdown in UK private sector activity in September, affecting both the services and manufacturing sectors.
Many companies noted that clients were adopting a “wait-and-see” approach ahead of the Autumn Budget, disrupting investment plans. This is despite the Chancellor encouraging business investment to boost economic growth.
Labour’s emphasis on the previous Government’s poor economic legacy and the need for a tough budget on 30 October has added to the cautious outlook for many businesses.
Meanwhile, the Confederation of British Industry’s (CBI) survey of manufacturers reported export order books as the weakest since December 2020. The CBI’s industrial trends report revealed a grim outlook, with total and export order books declining in September. A net balance of -44% of manufacturers reported export orders below normal, compared to -22% in August.
Despite concerns over potential tax increases and slowing growth, the S&P survey marked its 11th consecutive month of rising private sector activity. The composite PMI index dipped slightly to 52.9 in September from 53.8 in August, indicating growth. Inflation is expected to ease as businesses slow price rises, with average prices increasing at the slowest rate since February 2021.
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