UK economy stalls as business confidence crashes to 14-month low

Britain’s economic recovery has suffered another setback, with business activity falling to its weakest level in 14 months. New S&P Global figures suggest uncertainty over politics, rising costs and global trade disruption are taking their

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toll, particularly in the services sector where many small and micro businesses operate. While manufacturers have enjoyed a short-lived boost from stockpiling, the wider picture is far less encouraging. Slower customer demand, squeezed margins and falling confidence are once again leaving Britain’s smallest businesses on the frontline of an increasingly fragile economy.

UK BUSINESS SLUMPS TO 14‑MONTH LOW

Political chaos, trade disruption and collapsing confidence send activity into reverse

Britain’s economy has hit the brakes. New figures show business activity has plunged to its lowest level in 14 months, as political turmoil and global trade disruption batter confidence across the country.

The latest S&P Global Purchasing Managers’ Index (PMI) (ie what purchasing managers think of the economy) reading crashed to 49.4 in June, slipping further below the crucial 50 mark that separates growth from decline. It’s the second month in a row the private sector has shrunk, and small firms are already feeling the squeeze.

SERVICES SECTOR TAKES A HAMMERING

The services sector, which is the part of the economy that’s been shoring it up, has been hit hardest, with activity falling to its weakest point since January 2023.

Businesses blame:

• jittery customers

• rising costs

• Westminster chaos

• ongoing trade disruption linked to global conflicts

Headcounts are dropping, orders are slowing, and confidence is evaporating.

For small and micro businesses, this means fewer customers, slower spending and tougher trading conditions.

MANUFACTURING HOLDS THE LINE

There was one bright spot: manufacturing. Output hit a 21‑month high, with some firms even adding jobs.

Experts say the boost is down to “strategic stockpiling” with companies panic‑buying materials in case global supply chains worsen. In other words, it’s temporary.

COSTS STILL RISING

S&P Global warns that price pressures remain stubbornly high, fuelled by:

• the energy shock

• supply chain chaos from the Middle East

• existing cost pressures from government policies

Economist Chris Williamson says the private‑sector slump is already dragging employment down, with more pain likely ahead.

ECONOMISTS AREN’T OPTIMISTIC ABOUT RECOVERY THIS YEAR

Some predict:

• growth unlikely to pick up

• inflation still working its way through supply chains

• interest rates likely stuck until 2027

Speculation over future tax and spending plans could make things even worse.

POLITICAL TURMOIL MAKING EVERYTHING WORSE

When Westminster is in chaos, businesses stop spending, customers stop buying, and small firms take the hit.

This downturn isn’t abstract and it’s already hitting the smallest firms hardest.

Expect:

• slower sales

• more cautious customers

• rising costs

• delayed payments

• tougher trading conditions

• hiring freezes

• pressure on margins

The UK economy is stalling. Services are slumping. Manufacturing is stockpiling. Costs are rising. Politics is chaotic. Small businesses, as always, are caught in the crossfire.