UK Economy Enters 2026 Amid Sharp Private Sector Downturn, Says CBI
The UK private sector is poised for a decline in output during the fourth quarter of 2025, according to the Confederation of British Industry (CBI). This assessment is based on a survey conducted between 24 November and 11 December involving over 900 firms around the time of the autumn budget. The growth indicator dropped to -30% in December from -27% in November, signaling a broad-based downturn across the private sector.
Data from Adzuna highlights a fall in job vacancies, with a 6.4% decrease month on month and a 15% drop year on year in November. The year 2025 has been described as one of the toughest for jobseekers since the pandemic, with unemployment reaching 5.1% in the three months to October. Despite this, wage growth remains above inflation, with the average advertised salary rising 7.7% year on year to £42,687 in November and IT sector wages up 12.7%.
The 26 November budget failed to significantly boost business optimism. Private firms expect activity to continue falling in the coming three months. The Bank of England has warned of zero growth in Q4 2025 after a decline in output in October, noting that consumers have been holding back spending ahead of the budget announcement.
Firms have urged the incoming Labour government to provide support in addressing high energy costs and to simplify the tax system to encourage economic growth. Uncertainty preceding the budget has led to cuts in spending decisions and hindered pipelines of work, exacerbating the private sector's challenges.
