Written by: Keith Tully
Reviewed: Friday 30th November, 2018
Optimism among companies within the UK’s services sector fell sharply during the three months to November, according to figures compiled for the Confederation of British Industry (CBI).
The services sector is a hugely significant contributor to overall activity within the British economy but companies in the sector have recently seen both their profitability and their business volumes decline.
Consumer services companies, who include operators of restaurants, bars, hotels and leisure facilities, saw a particularly sharp drop in business volumes in recent months and their profitability levels are reportedly declining at the sharpest pace in a year.
The CBI’s figures suggest that profits in both the consumer services and the professional services subsectors will decline through until at least the end of February next year.
Uncertainty around Brexit is regarded by the CBI as being among the major causes of concern for UK-based service sector operators.
“Brexit uncertainty continues to take its toll on the UK’s services firms,” commented Rain Newton-Smith, the CBI’s chief economist.
“Services firms expect to be operating in a challenging environment over the next quarter and beyond, with demand set to weaken in the coming three months and firms seeing little prospect of expanding their businesses in the year ahead.”
Meanwhile, figures released recently by the market research firm GfK suggest that consumer confidence is currently on the slide across the UK.
The company’s Consumer Confidence Index fell by three points during November, with all the measures it uses to track the way consumers feel about their finances indicating a downturn in sentiment.
“Against a backdrop of the Chancellor telling everyone that the Brexit deal on the table will make people worse off, this month we’re recording an across the board fall for all measures with concerns over household finances, the general economy and purchase intentions,” explained GfK’s client strategy director Joe Staton.
“The denouement to more than two years of bewildering Brexit wheeler-dealing looks like it will be enacted precisely when many consumers would prefer to be thinking of a well-earned Christmas break, filled with family get-togethers, warmth and festivity - possibly turning this year’s ‘season of goodwill’ into ‘the season of uncertainty’.”