Private sector expects activity to fall through fourth quarter of 2025 – CBI Growth Indicator 

Firms across the private sector expect activity to fall in the next three months (weighted balance of -20%), extending a run of negative predictions that began in late 2024, according to the CBI’s latest Growth Indicator.

The downturn is expected to be broad-based, with business volumes in the services sector set to decline (-18%), driven by weak expectations in both business & professional services (-14%) and consumer services (-31%). Distribution sales are expected to fall at significantly (-33%), alongside a contraction in manufacturing output (-14%).

The disappointing outlook comes as private sector activity fell in the three months to September (-32%). All sub-sectors reported falling activity. 

Alpesh Paleja, CBI Deputy Chief Economist, said:

“The weakness in private sector activity doesn’t show any signs of letting up and is now expected to persist to the end of this year. The themes cited by businesses paint a, by now, familiar picture: demand conditions are lacklustre, with firms feeling the knock-on impact of cautious spending and investment behaviour across the economy. Wrapped into this, the rise in employer NICs and the National Living Wage continue to bite on bottom lines. And a persistent climate of global economic uncertainty is further hampering decision making.

“This is now accompanied by renewed nervousness around the November Budget, with businesses concerned about being asked to again shoulder the burden of fixing the public finances. The business tax burden is already at a 25-year high and the Chancellor must quickly reaffirm last year’s commitment to no more business tax rises, avoiding Budget speculation further curtailing sentiment in the run up to 26 November. Doing so will boost confidence and accelerate the significant contribution businesses want to be making to the shared growth mission.”

Key findings from our monthly Services Sector Survey showed:

• Business volumes in the services sector fell in the three months to September (-35%), at a faster pace than in the quarter to August. The latest data marked eleven consecutive rolling quarters of decline.

• Both business & professional services (-35%) and consumer services (-34%) volumes fell through the quarter. 

• Hiring intentions within the services sector remain weak. Business & professional services expect headcount to fall slightly over the next three months (-5%), while consumer services companies expect a sharp fall in numbers employed (-39%). 
• Selling price expectations in the services sector have accelerated relative to August and stand above the long-run average (+14%, from +9% in August; long-run average +7%). Inflation expectations remain modest for business & professional services firms (+10%) but have picked up for consumer services (+27%).

A balance is the weighted percentage of companies reporting an increase minus those reporting a decrease.