Job cuts slam the brakes on UK economy as firms are hit by tax hikes and global trade war
Updated:
Britain’s ‘sluggish’ economy is set to grow just 0.1 per cent in the second quarter as firms axe jobs in the wake of tax hikes and a global trade war.
A closely-watched purchasing managers’ index (PMI) survey showed that while business activity has picked up slightly in June, sentiment is stuck ‘in the doldrums’.
And a separate survey suggested consumer sentiment was ‘firmly in negative territory’.
It is the latest evidence that Labour’s claim to have fixed the foundations of the economy, after a decent start to the year with growth of 0.7 per cent in the first quarter, is proving premature.
Instead, Rachel Reeves’s £25billion National Insurance raid on employers and a rise in the minimum wage are pushing up companies’ costs while Donald Trump’s tariff wars have weighed on export demand.
The ‘flash’ PMI survey for June gave a reading of 50.7 – an improvement on May’s 50.3 but only just above the 50-mark that separates growth from contraction.
Slump: A PMI survey showed that while business activity has picked up slightly in June it remains lacklustre and sentiment Is stuck 'in the doldrums'
The services sector was on the up but manufacturers’ order books shrank again.
‘This was mainly attributed to the impact of US tariffs, rising geopolitical uncertainty and intense price competition in major global markets,’ the report said.
Private sector employment fell for the ninth month in a row and at a faster pace than in May.
Chris Williamson, chief business economist at S&P Global market intelligence, said: ‘Growth of business activity remains disappointingly lacklustre.
Business confidence also remains in the doldrums compared to this time last year.’
He added that Government policies, fears of global trade protectionism and rising tensions in the Middle East all had an effect.
A separate monthly S&P Global survey showed consumer sentiment worsening amid growing fears over jobs and a squeeze on living costs, resulting in an increased appetite for household borrowing.
Maryam Baluch, economist at S&P Global Market Intelligence, said: ‘Pessimism among UK households shows no signs of improving, with consumer sentiment remaining firmly in negative territory.
Concerns about making ends meet have intensified due to high prices and job insecurity.’
It comes after dismal official figures last week showed more than 100,000 jobs were lost last month while inflation remained stuck at 3.4 per cent.
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