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Economic Development

Impact of Budget and global uncertainty hits º£½ÇÊÓÆµ services industry

The survey showed that incoming work for services firms decreased in January, ending a 14-month period of continuous growth

Chancellor of the Exchequer Rachel Reeves(Image: Stefan Rousseau/PA Wire)

For the first time in over a year, new work for firms in the crucial services sector has declined, according to a closely monitored survey, indicating a grim outlook for the º£½ÇÊÓÆµ economy.

The survey revealed that incoming work for services companies dropped in January, bringing an end to a 14-month streak of continuous growth, as reported by .

Many firms participating in S&P’s purchasing managers’ index (PMI) attributed this slump in demand to the Budget, which has played a part in dampening business sentiment.

Global economic uncertainty was also cited as a factor contributing to the decrease in new work, as per the survey.

It further indicated that exports fell for the second consecutive month, although US demand remained relatively robust compared to "lacklustre" spending in Europe.

"A renewed downturn in new business volumes added to signs that the near-term º£½ÇÊÓÆµ economic outlook remains tilted to the downside," commented Tim Moore, economics director at S&P Global Market Intelligence.

The overall services PMI recorded 50.8 in January, matching the lowest level in 15 months. This figure is a drop from 51.1 in December and slightly below the earlier ‘flash’ estimate.

A reading above 50 signifies growth. The survey also provided additional evidence of the Budget's impact on businesses, with input prices escalating at the quickest rate since April 2024 due to increased salary payments and suppliers' attempts to pass on higher payroll costs.