Firms across the private sector once again expect activity to
fall in the next three months (weighted balance of -20%),
according to the CBI's latest Growth Indicator. Nonetheless,
this pessimism has eased somewhat, with growth
expectations at their least negative in three months.
The downturn in activity is
expected to be broad-based, with business volumes in the services
sector set to decline (-16%) – driven by subdued expectations
in business & professional services (-11%)
and a bleak outlook for
consumer services (-38%) volumes. Distribution sales
are also expected to fall in the three months to April (-37%),
and manufacturers anticipate another modest
fall in output (-14%). However, negative
expectations for manufacturers did ease for a
second month running.
This disappointing outlook comes as private sector
activity fell in the three months to January (-33%, broadly
unchanged from -34% in the three months to December). All
sub-sectors reported falling activity.
Alpesh Paleja, CBI Deputy Chief Economist,
said:
“The UK economy
has not experienced a strong start to 2026.
While there are tentative signs of stabilisation and resilience
in some specific areas, the big
picture remains similar to much of last
year: businesses remain cautious,
households are downtrading and confidence is
still fragile. Recent geopolitical tensions
will only have added to uncertainty at the
margin.
“Worryingly, our latest surveys show that persistently weak
growth expectations are now accompanied by an uptick
in price pressures – at a time when inflation is
already uncomfortably high. That combination
risks a further squeezing of margins and
dampening of investment, just when the economy
needs momentum.
“If the government wants to shift the dial, it must focus on the
fundamentals of competitiveness. That means lowering the cost of
doing business, starting with decisive action on energy costs and
streamlining regulation to give firms the confidence to
invest. Clear signals and rapid progress on these fronts would
provide an immediate boost to business confidence and help turn
tentative stabilisation into sustainable growth.”
Key findings from our monthly Services Sector Survey
showed:
-
Business volumes in the services sector fell
in the three months to January (-37%), at a broadly
similar pace to December.
- Both business & professional services (-33%) and
consumer services (-50%) volumes fell heavily through the
quarter.
-
Hiring intentions within the services sector
remained negative (-16%), extending
a run of weakness that began in late
2024. Business & professional services companies
expect headcount to fall slightly over the
next three months (-8%), while consumer services firms expect
a more significant fall in numbers employed
(-29%).
-
Selling
price inflation expectations
in the services sector accelerated for the second
consecutive rolling-quarter (+26%, from +15%
in December, and +7% in November). This reflects a
pickup in expectations for business &
professional services firms (+27%), whereas consumer
services selling price expectations were broadly unchanged
(+24%).
Full results are in the
attachment accompanying this release.
26 January 2026
Notes to Editors:
The CBI Growth Indicator is a composite measure of activity,
based on responses to CBI surveys. In
total, 904 firms responded
between 18 December and 13 January.
The CBI Growth Indicator is a composite of data on output, sales
and business volumes drawn from three of the CBI's long-running
qualitative UK business surveys: the Industrial Trends Survey
(ITS, covering manufacturing); the Distributive Trades Survey
(DTS, covering retail, wholesale and motor trades); and the
Service Sector Survey (SSS, covering business, professional and
consumer services).
The Growth Indicator covers the volume of output for the ITS,
volume of sales for the DTS and volume of business for
the SSS, for the past three months and next three
months.
A balance is the weighted percentage of companies reporting an
increase minus those reporting a decrease.
