UK businesses expect private sector activity to fall in the final three months of the year as weak demand, high costs and uncertainty ahead of next month’s Budget weigh on confidence, according to the Confederation of British Industry.

The CBI’s latest Growth Indicator recorded a weighted balance of minus 14 per cent for expected activity in the three months to December, extending a run of negative expectations that has persisted since late 2024.

The survey suggests weakness will be broad-based, although companies are generally less pessimistic than earlier this year.

Distribution businesses reported the weakest expectations, with a balance of minus 34 per cent, while consumer services stood at minus 12 per cent and business and professional services at minus 10 per cent. Manufacturers expect output to fall slightly, at minus 6 per cent, their least negative reading since March.

The outlook follows a decline in reported private sector activity during the three months to September, when the balance stood at minus 19 per cent. The weakness was concentrated in services and distribution, while manufacturers reported only a marginal fall in output.

The findings add to evidence of subdued momentum in the UK economy. Official figures show gross domestic product grew 0.3 per cent in the second quarter of 2026, slowing from 0.7 per cent in the first three months of the year. (ons.gov.uk)

The Bank of England has also warned that underlying economic growth remains weak. Its September Monetary Policy Committee meeting noted that GDP growth was expected to slow to 0.2 per cent in the third quarter. (bankofengland.co.uk)

Alpesh Paleja, deputy chief economist at the CBI, said there were “some signs of resilience and even mild improvement” in manufacturing and professional services, but these were being outweighed by broader pressures.

“Cost pressures remain strong, especially around energy and employment and, coupled with weak demand, this continues to put pressure on margins, recruitment and investment plans,” he said.

The CBI urged Chancellor John Healey to avoid further increases in employment and investment costs in next month’s Budget. It called for reductions in policy costs embedded in business electricity bills, consideration of lower employer national insurance contributions and further reform of business rates.

The Growth Indicator combines CBI surveys covering manufacturing, distribution and services. Its balances measure the proportion of companies reporting rising activity minus those reporting a decline, rather than the percentage change in economic output.