UK services optimism plunges to three-year low as costs surge, CBI warns

Optimism in the UK services sector fell at its fastest pace in three years in the three months to November, as persistent cost pressures squeezed profitability, according to the Confederation of British Industry. The CBI’s services optimism index slid to –50, down from –29 in August, while service volumes also weakened.

The industry is unlikely to find relief from the government’s 26 billion-pound tax package unveiled in Chancellor Rachel Reeves’ November 26 budget, the CBI said. Charlotte Dendy, head of economic surveys, warned that the budget “adds further costs to businesses,” including higher national insurance charges on salary-sacrifice pension contributions and no action on elevated energy costs.

A separate survey from the Institute of Directors painted a similarly bleak picture. Business sentiment improved only marginally after the budget, rising to –72 from –73 in early November, keeping confidence near record lows. The IoD survey primarily reflected smaller firms, with two-thirds of respondents employing fewer than 50 people.