Firms across the private sector expect activity to fall in the
next three months (weighted balance of -18%), according to the
CBI's latest Growth Indicator. Expectations
for growth have now been negative since the
end of 2024, and the latest outturn is roughly
in line with the average seen over this
time.
Business volumes in the
services sector are anticipated to
fall (-15%), driven by expected declines in business &
professional services (-16%) and consumer services (-12%).
However, the latter marks the least pessimistic
expectations since October 2024. Distribution sales are
expected to decline sharply
(-40%), but manufacturers anticipate output to stabilise
over the three months to June (-3%), after a run of negative
expectations over the past year.
The subdued outlook comes as private sector activity
fell in the three months to March (-35%). All sub-sectors
reported falling activity.
Alpesh Paleja, CBI Deputy Chief Economist,
said:
“As we moved into Spring, there were tentative
signs of activity beginning to thaw in parts of the economy. But
overall, it's clear that growth expectations
remained weak, as businesses continued to grapple with
uneven demand, persistent cost pressures and low
confidence.
“These challenges are now compounded by the escalating conflict
in the Middle East. The direct effects on businesses
are numerous and still emerging, but firms are
increasingly alert to the potential for higher energy costs,
renewed supply chain disruption and tighter
availability of key inputs. The prospect of higher consumer price
inflation in the months ahead will also weigh further on
growth, exacerbating an already difficult trading
environment for many businesses.
“The Chancellor was right to
avoid a knee-jerk response to the
conflict in the Middle East, reaffirming a welcome
commitment to protecting the UK's public finances. Now
the focus must be on working collaboratively with the
business community to tackle the rising cost
of doing business, which was already a problem before the
conflict. This includes cutting
policy costs on business' energy
bills and finding appropriate
landing zones on the Employment Rights Act, which
would support growth
and help mitigate cost of living
pressures.”
Key findings from our monthly Services Sector Survey
showed:
- Business volumes in the services sector fell in the three
months to March (-36%), at a faster pace than
in February.
- Both business & professional services (-30%) and consumer
services (-57%) volumes fell heavily through the quarter.
The latter saw the fastest decline since September
2022.
- Hiring intentions within the services sector
remained subdued (-16%), extending a run of weakness
that began in late 2024. Business & professional
services expect headcount to be cut modestly (-13%) in the three
months to June, while consumer services expect
a somewhat faster reduction (-20%).
- Selling price inflation expectations in the services
sector (+27%) are at their strongest in
eleven months. This reflects a pick-up for both
business & professional services (+23%) and consumer services
(+43%) firms.
A balance is the weighted percentage of companies reporting
an increase minus those reporting a
decrease.
Full results are in the
attachment accompanying this release.
26 MARCH 2026
Notes to Editors:
The CBI Growth Indicator is a composite measure of activity,
based on responses to CBI surveys. In
total, 722 firms responded
between 25 February and 16 March.
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.
