CBI survey points to further slowdown in private sector activity this summer

Businesses across the UK private sector expect activity to decline further over the summer, according to the latest Growth Indicator from the Confederation of British Industry (CBI).

The survey found that firms anticipate activity falling in the three months to August, with a weighted balance of -24%, broadly unchanged from the previous survey in April. The findings extend a run of negative growth expectations that began in late 2024.

The subdued outlook follows a fall in private sector activity during the three months to May, when firms reported a weighted balance of -31%, with all major sectors recording declines.

Services businesses expect activity to contract by -28% over the coming three months. Within the sector, consumer services firms anticipate a decline of -30%, while business and professional services companies expect activity to fall by -27%, the weakest outlook recorded by the sector in a year.

Distribution businesses also expect sales volumes to decline (-23%), while manufacturers forecast a more modest reduction in output volumes (-13%).

According to the CBI, weak consumer demand and continued caution among business customers are weighing on activity levels, while geopolitical uncertainty is adding to concerns around costs and supply chains.

Alpesh Paleja, Deputy Chief Economist at the CBI, said: “The hot weather may have arrived, but businesses are still feeling the chill as they head into summer. Activity continues to be buffeted by weak household spending and clients’ reluctance to commit to big expenditure.

“Ongoing tensions in the Middle East are adding another layer of pressure, with firms increasingly alert to the risk of further cost increases and supply chain disruption.”

The survey also highlighted mounting cost pressures, particularly in manufacturing and consumer-facing sectors. Many businesses reported absorbing rising costs through already compressed margins rather than passing them on to customers.

Paleja said firms remained keen to invest and grow but were increasingly focused on managing risks and maintaining resilience in a challenging operating environment.

“Businesses want to grow, but many are being forced to focus on resilience rather than expansion. Firms need an easier and cheaper environment in which to operate. That means further measures to cut business energy costs, action to ease high labour costs, and a serious push to reduce the regulatory burden that is weighing on investment, employment and growth.”