UK private-sector activity shrinks to slowest growth since May

 

 UK private-sector activity shrinks to slowest growth since May

The United Kingdom’s private sector posted its weakest growth since May, raising new concerns that the economy is edging closer to stagnation. Business surveys for September showed both services and manufacturing under pressure, with companies citing higher financing costs and lingering uncertainty over trade and investment. While the UK has avoided a full recession so far, momentum appears to be fading as demand softens and confidence wanes.

Manufacturing, in particular, remains under strain. Firms report declining new orders, supply chain delays, and rising input costs, especially in energy and raw materials. The services sector, which had been a relative bright spot earlier in the year, also showed signs of fatigue, with fewer new projects and reduced hiring. This slowdown is especially worrying for policymakers, as services make up the largest share of the UK economy.

Higher interest rates have played a significant role in curbing growth. While the Bank of England has signaled that inflation is finally easing, borrowing remains expensive for both consumers and businesses. Mortgage holders continue to feel the pressure of higher repayments, while small businesses struggle to secure affordable credit. These challenges are dampening investment and consumer spending, making it difficult for the private sector to expand.

The outlook is complicated further by global uncertainty. Sluggish growth in the U.S. and Europe, combined with geopolitical tensions, has created a cautious environment for investors. Foreign direct investment into the UK has slowed, reflecting broader concerns about competitiveness and long-term stability. Without a clear strategy to boost growth, economists fear the country risks falling behind its peers.

For now, attention is turning to the government’s upcoming fiscal plans. Business leaders are urging policymakers to provide targeted support for key industries, invest in infrastructure, and ease regulatory burdens. Whether such measures will be enough to restore momentum remains unclear. What is clear, however, is that the UK’s private sector faces a difficult road ahead as it attempts to balance falling inflation with the cost of tighter financial conditions.