Responding to the findings of the latest quarterly CBI Services Sector Survey, Rain Newton-Smith, the CBI’s chief economist, calls on the Government and the EU to finalise the Withdrawal Agreement and support people’s jobs. Anna Tobin reports
The latest quarterly CBI Services Sector Survey reveals that the business and professional services sector, which covers the accountancy, legal and marketing industries, saw growth in business volumes ease and that the pace is set to slow more in the three months to November. There was better news for the consumer services sector, which covers the hotels, bars, restaurants, travel and leisure industries, where, after a sharp decline in the three months to May, business volumes picked up a little and demand for consumer services is expected to increase a little further next quarter.
Profitability was flat for business and professional services and fell for a second successive quarter in consumer services. Cost pressures remained elevated in both areas and, despite easing last quarter, costs growth in business and professional services edged higher and remained above average in consumer services. In the next quarter, prices are expected to remain stable in business and professional services, but to rise for consumer services.
The broader economic outlook is flat, with UK GDP growth seen to be held back by weak household income growth and the impact of Brexit uncertainty on investment. “Although consumer services growth inched up last quarter, overall services sector growth was fairly muted. And with cost pressures rising, services firms are not seeing any improvement in their bottom lines. The underlying challenges facing the sector are not going away any time soon,” said Rain Newton-Smith, the CBI’s chief economist.
“Demand growth is expected to remain subdued next quarter and firms seem hesitant over the prospects for expanding their businesses in the year ahead. They still plan to take on new workers next quarter, but the confidence to invest significantly more is lacking.
“Above all, the Government and Brussels need to get on with finalising a Withdrawal Agreement, putting pen put to paper on a jobs-first transition period and finally, agreeing a new relationship between the UK and the EU that puts people’s livelihoods above politics.”