Written by: Keith Tully
Reviewed: Wednesday 29th May, 2019
Service sector companies operating across the UK economy saw their profits slide and their confidence decline again during the three months to May.
That’s according to the latest quarterly survey of the sector carried out by the Confederation of British Industry (CBI), which also revealed that business volumes fell among service firms in the period.
Consumer-facing service businesses, who include hotels, bars, restaurants, as well as travel and leisure firms, became notably less positive in their overall outlook for the third consecutive quarter, the latest figures show.
Meanwhile, those consumer-facing operations also saw their profitability fall, on average, for the fifth consecutive quarter.
Among business and professional service companies, volumes fell at their sharpest rate since August 2012 in the most recent quarter and profitability is described as having “plummeted” at the fastest pace since November 2011.
Business and professional services as a sub-sector incorporates accountancy practices, legal firms and marketing companies across the country, and they are generally believed to be “extremely negative” about their prospects for expansion in the coming year, according to the CBI’s data.
A share of the blame for the challenges and negative outcomes being recorded across Britain’s services sector is being attributed to Brexit-related uncertainty.
“Brexit paralysis continues to take a toll on the UK’s services firms. Profits, optimism and investment spending are falling sharply amidst a torrid operating environment,” said the CBI’s deputy chief economist Anna Leach.
“Politicians have wasted six critical weeks, allowing uncertainty to tighten its stranglehold on the British economy. Business and the country need Westminster to rule out No Deal, and deliver an urgent resolution to the Brexit mess,” she added.
The CBI and its spokespeople have been consistently warning about the potential dangers of leaving the EU without a deal and urging the UK government to find some way of resolving the uncertainty that continues to surround the Brexit process and cause concerns for businesses.
Speaking recently after prime minister Theresa May announced her intention to bring a new EU withdrawal plan before the UK parliament, the CBI’s director general Carolyn Fairbairn described Brexit as having “left the economy stranded in no man’s land”.
“Businesses urge them [politicians] finally to find the spirit of compromise that has eluded them so far. Jobs and livelihoods depend on it,” she said.