UK business sentiment weakens as firms grow more pessimistic on growth
UK firms turned more pessimistic on growth, with the CBI’s expected output balance falling to -28 and retail sales sinking to their weakest seasonal reading in more than two years.
British business sentiment weakened again in June, with the Confederation of British Industry’s expected output balance falling to minus 28 from minus 24, its lowest reading since December 2025. The survey covered 848 companies between May 26 and June 12 and pointed to a broad-based deterioration rather than weakness confined to one corner of the economy.
The CBI’s separate three-month growth indicator dropped to minus 34 from minus 31, and firms across the private sector expected activity to fall over the summer. The 1 June gauge had already recorded a weighted balance of minus 24 for the three months to August. The latest reading showed services output fell significantly, with both consumer-facing and business services under pressure.
S&P Global’s June flash UK services purchasing managers’ index fell to 48.7 from 49.3, marking a second straight month of contraction and the steepest downturn since January 2023. Sharply rising costs and weaker customer confidence were weighing on activity, with the war in the Middle East and domestic political uncertainty also weighing on sentiment.
In its retail survey published on June 25, the CBI found sales volumes were below seasonal norms to the greatest extent in more than two years. Its retail sales balance for the year to June fell to minus 54 from minus 46 in May, while the three-month average dropped to minus 56, the weakest reading since records began in 1983. Martin Sartorius said retailers were seeing a “gloomy start to the summer,” with sales disappointing relative to normal seasonal patterns and consumer sentiment remaining depressed.
Adzuna data showed UK vacancies rose for a fourth consecutive month, while average advertised salaries fell 0.22% on the month to £43,998 and were only 3.76% higher than a year earlier. Graduate pay was the sharpest weak spot, with salaries down 42% year on year, a record decline. The CBI cut its forecasts for UK growth to 1.1% in 2026 and 0.9% in 2027, while it expects inflation to rise toward 4% by the end of this year, unemployment to reach 5.5%, business investment to contract and private-sector hiring to remain subdued. Office for National Statistics data showed GDP rose 0.6% in the first quarter after 0.2% growth in the final quarter of 2025.
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