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UK economic growth decelerates as budget uncertainty impacts investment strategies; German recession already factored in – live business updates


Uncertainty around the upcoming budget is causing concern for UK businesses this month, according to the latest survey of purchasing managers. S&P Global reports that private sector activity growth has slowed, with clients adopting a “wait-and-see” approach ahead of the Autumn Budget on 30 October. Fiscal policy uncertainty was cited as the most significant concern among UK private sector firms. Despite this, the Flash UK PMI Composite Output Index remains in growth territory, at 52.9.

While private sector employment growth slowed and investment plans were put on hold, firms slowed their price rises this month, encouragingly. Chief economist at S&P Global Market Intelligence, Chris Williamson, noted a robust economic growth accompanied by easing inflationary pressures, hinting at a ‘soft landing’ for the UK economy.

However, concerns about the budget are still prevalent among businesses, with Chancellor Rachel Reeves pledging no return to austerity. The decline in company prices rises in the PMI report may make it easier for the Bank of England to lower interest rates soon.

In contrast, the eurozone is facing a downturn, with Germany experiencing a significant decline in business activity. The latest PMI survey indicates a contraction in the eurozone economy for the first time in seven months. On the positive side, the pound has hit a two-year high against the euro, as the UK economy continues to outperform the eurozone. Amidst these challenges, anti-corruption campaigners welcome investigations into over £600m worth of Covid contracts awarded under the Conservatives.

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Photo credit www.theguardian.com

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