UK businesses expect activity to decline further over the next three months, according to the latest survey from the Confederation of British Industry, highlighting the fragile outlook facing the private sector despite stronger-than-expected GDP growth earlier this year.

The CBI’s latest Growth Indicator found that firms across the economy anticipate a fall in activity through to August, extending a run of negative expectations that began in late 2024. The outlook is broadly unchanged from the organisation’s previous survey and suggests many companies remain cautious about the months ahead.

Services businesses are expected to see the sharpest decline, with weaker demand forecast across both consumer-facing industries and business and professional services. Distribution firms also anticipate falling sales, while manufacturers expect a more modest contraction in activity.

The subdued outlook follows a difficult spring, with businesses reporting declining activity in the three months to May across all major sectors.

The findings stand in contrast to recent official data showing the UK economy grew by 0.6 per cent in the first quarter of 2026, making it one of the strongest-performing economies in the G7. However, business leaders say the headline growth figures mask continuing pressures on companies and consumers.

Alpesh Paleja said weak household spending and cautious corporate customers were continuing to weigh on demand. “Businesses are still feeling the chill as they head into summer,” he said.

Rising geopolitical tensions in the Middle East are adding to concerns, with firms increasingly worried about higher energy prices, supply chain disruption and escalating input costs. The survey suggests these pressures are particularly acute in manufacturing and consumer services.

Many companies are absorbing a significant proportion of these additional costs rather than passing them on fully to customers, placing further strain on already narrow margins.

The result, according to the CBI, is that businesses are focusing on resilience rather than expansion. Investment plans remain subdued as firms prioritise managing costs and navigating uncertainty.

The organisation is calling for measures to reduce energy costs, ease labour market pressures and simplify regulation, arguing that a more supportive operating environment is needed if businesses are to return their focus to growth.

The survey adds to growing evidence that while the UK economy has so far avoided a sharper downturn, confidence among businesses remains fragile and vulnerable to further external shocks.