Private sector outlook at lowest in over two years, CBI says

Private sector firms in the UK expect activity to fall in the first quarter of 2025, with expectations at their weakest levels in more than two years.

According to the CBI's monthly Growth Indicator survey, projected business volumes for the three months to March fell to a weighted balance of -24% of firms, down from -10% last month.

Expected economic activity in the services sector is expected to decline (-18%), while manufacturers also estimate output will fall (-31%), with expectations in the latter sector at their weakest since May 2020.

Private sector activity, which has been flat of falling since August 2022, dropped again in the three months to December, with the decline picking up to -21% from -13% in November.

“There is little festive cheer in our latest surveys, which suggest that the economy is headed for the worst of all worlds – firms expect to reduce both output and hiring, and price growth expectations are getting firmer," said Alpesh Paleja, the CBI's interim deputy chief economists.

"Businesses continue to cite the impact of measures announced in the Budget – particularly the rise in employer NICs – exacerbating an already tepid demand environment."

Paleja said firms are looking to the government to "boost confidence and to give them a reason to invest, whether that’s long overdue moves to reform the apprenticeship levy, supporting the health of the workforce through increased occupational health incentives or a reform of business rates".