Market News

By Tom Rees

(Bloomberg) -- The UK private sector suffered the weakest performance in 13 months in November amid mounting concerns over tax hikes in the Labour government’s first budget, revised purchasing-management data show.

S&P Global’s composite PMI dropped from solid growth of 51.8 in October to a stagnant 50.5 last month. It was a modest improvement on the flash score of 49.9, which was below the symbolically important 50 threshold separating growth and contraction.

It suggested that a cooling in private-sector activity following UK Chancellor Rachel Reeves’ budget was slightly less severe than first estimated. 

Nonetheless, the figures will concern Prime Minister Keir Starmer and Reeves after they promised to boost annual GDP growth to the strongest in the Group of Seven. Their first budget on Oct. 30 was met with a backlash from businesses after firms were hit by another hefty increase in the minimum wage and the bulk of Reeves’ £40 billion ($51 billion) of tax rises.

“Worries about the impact of policies announced in the Autumn Budget, in particular those pushing up employment costs, were widely reported as leading to a gloomier assessment of business investment prospects and the broader UK economic outlook,” said Tim Moore, economics director at S&P Global Market Intelligence.

S&P Global said businesses had resorted to hiring freezes and not replacing voluntary leavers in response to the large hike in costs caused by the budget.

--With assistance from Mark Evans.