UK Services Sector Contracts Amidst Tariff Turmoil and Rising Costs
Britain's services sector experienced its first contraction in April 2023 amid U.S. tariff issues and escalating costs. The S&P Global UK Services Index showed a decline driven by falling orders and employment. Concerns over global market conditions have further exacerbated the situation, affecting export and sentiment adversely.
- Country:
- United Kingdom
The UK's services sector, a significant component of the nation's economy, faced its first contraction since October 2023. According to a recent survey, April's figures revealed the steepest decline in over two years, impacted heavily by ongoing U.S. tariff disputes that have been detrimental to exports and overall sentiment.
The S&P Global UK Services Purchasing Managers Index fell to 49.0 from March's 52.5, marking a substantial decrease. This was influenced by reduced new orders and employment, alongside climbing input costs due to rising payroll taxes and a minimum wage hike. The Bank of England is expected to note these pressures in its upcoming interest rate discussions.
The survey highlighted that global financial instability, particularly following U.S. tariff measures, is weighing on the sector. Overseas orders have hit their lowest since February 2021, reflecting the broader hesitancy among firms. The Bank of England is anticipated to lower interest rates, as inflation dynamics remain uncertain.
(With inputs from agencies.)
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