UK (Parliament Politics Magazine) – In June, UK service firms showed rising confidence since the autumn budget, expecting better sales and investment despite ongoing tariff impacts.
As reported by The Guardian, new data shows UK services sector bosses were more optimistic last month than at any point since Rachel Reeves’ first budget. The impact of Donald Trump’s tariff war appears to be fading.
What did the latest survey reveal about the UK services sector outlook amid tariffs?
Business leaders surveyed anticipate improved sales and increased investment ahead, even as rising US tariffs reach historic highs.
The White House tariffs have so far targeted goods like steel and cars, leaving the services sector largely unaffected directly. However, these firms have suffered from a drop in global consumer and business confidence.
Business confidence in the UK fell following the chancellor’s budget, which increased company taxes.
What did Tim Moore say about the UK services sector recovery?
The S&P Global purchasing managers’ index climbed to 50.9 in May, up from April’s 27-month low of 49.0.
Tim Moore, economics director at S&P Global, said the services sector, representing about 85% of UK business, bounced back in May. He pointed to growing confidence among clients and a drop in tariff worries.
He stated,
“Optimism reached its highest level since October 2024, which reflected forthcoming business investment plans alongside hopes of a turnaround in sales pipelines and improving domestic economic prospects.”
Mr Moore noted that the impact of April’s tariffs still dragged down sales and employment in May. Many companies responded with further layoffs.
He stated,
“Prevailing demand conditions remained challenging in May, as signalled by a sustained reduction in total new orders across the service economy. Survey respondents mostly cited cuts to discretionary business and consumer spending.”
Mr Moore added,
“Reduced workloads and pressure on margins from increased payroll costs meant that headcounts remained under close scrutiny. Aside from the pandemic, the current eight-month period of falling employment numbers is the longest streak since 2008-10.”
What did Rob Wood say about UK growth recovery?
Rob Wood, chief UK economist at the consultancy Pantheon Macroeconomics, stated,
“UK growth has passed the worst as President Trump walking back his more ruinous tariffs cuts the panic that took hold in April.”
Mr Wood criticised the Bank of England for underestimating the strength of the UK economy. He pointed to recent PMI and survey data indicating that while growth is not dramatic, it remains consistent.
What did Mark Swannell say about the UK’s economic momentum?
Mark Swannell, chief economic adviser at the EY Item Club, said an increase in the services PMI and easing pressure on manufacturing lifted the UK’s composite PMI. It marked the first positive reading since March.
What did Rachel Reeves expect her infrastructure pledges to achieve?
Chancellor Rachel Reeves revealed a plan on Wednesday to expand road and rail projects across the country.
She believes the initiative will boost business confidence and attract long-term private-sector investment.
What did Rachel Reeves say about winter fuel payments?
Rachel Reeve said,
“We have listened to the concerns that people had about the level of the means test, and so we will be making changes to that; they will be in place so that pensioners are paid this coming winter.”
She added,
“We’ll announce the detail of that and the level of that as soon as we possibly can. But people should be in no doubt that the means test will increase and more people will get a winter fuel payment this winter.”