Profits from professional and business services firms in the UK fell the lowest since 2011 for a second quarter running as businesses are also cutting down on investments, according to the Confederation of British Industry (CBI).
CBI surveys have consistently showed a pessimistic outlook of the British economy as businesses face political uncertainties caused by Brexit and the upcoming national election on Dec. 12.
“The current economic climate is holding back UK services firms, which are reporting falling sentiment, declining volumes and weaker profitability. Neither is the outlook expected to improve,” said Rain Newton-Smith, chief economist at CBI.
Investing in machinery, vehicles, and plant were the lowest since 2010, while business and professional services profitability gauge were at -25 in August.
Overall, there was a drop in optimism for consumer services firms, at November’s level of -25, in comparison to August’s -28. Professional and business services picked up from -31 to -20.
Services sectors account for almost 80% of the British economy, which rose by 1.0% year-to-year in Q3 of 2019. This was the weakest since 2010, as shown by official figures.
Services sector grew by 1.4%, but became more dependent on government spending than it ever did since 2013.
CBI’s figures are the results of survey conducted on 179 business and professional service firms on Oct. 29 to Nov. 13.