A recent survey from the Confederation of British Industry (CBI) has revealed a significant downturn in sentiment across the UK’s consumer-facing services sector, reaching its lowest point since February 2025. The CBI is a prominent UK business organisation that lobbies government on behalf of its members, influencing policy on economic and business issues. The organisation reported on Thursday that a recent recovery in business services morale has also reversed, with optimism plummeting to its lowest level since November 2025. This broad decline underscores growing concerns within key segments of the British economy.
Charlotte Dendy, CBI economic surveys and data manager, highlighted the severe impact on businesses. “Profits are falling sharply and firms are being forced to scale back investment and reduce headcount,” Dendy stated. She further cautioned that with inflation projected to rise in the coming months, consumer caution is likely to intensify, exacerbating an already challenging demand environment for businesses.
The survey’s detailed findings indicate that consumer services firms experienced their fastest fall in overall profitability since August 2020, primarily because their operational costs escalated quicker than they could increase prices. The optimism balance for consumer services plummeted to -49 in May, a notable drop from -45 in February. Similarly, the optimism balance in the business and professional services sector saw a steep decline, moving from -3 in February to -46 in May, reflecting widespread apprehension.
Consequently, companies are anticipating reductions in all forms of capital spending, citing uncertain demand and insufficient returns, with the sole exception of IT investment within the business and professional services sector. These developments unfold as the Bank of England maintains a close watch on prices and profit margins, seeking to assess whether the surge in energy prices, influenced by the Iran conflict, will trigger persistent inflation. The survey gathered 97 responses from consumer services firms and 195 from business and professional services firms between April 27 and May 13.
