UK service businesses have cut employment for five months, with economists citing a "loss of growth momentum" since the autumn budget. The increase in employers' national insurance was a significant factor contributing to this trend, marking the longest contraction period since early 2011, excluding Covid-19. While the final services PMI reading indicates slight growth above the 50-point mark, analysts urge caution, noting that official unemployment remains low. Current economic conditions have led policymakers to consider public spending cuts to maintain fiscal targets as growth forecasts soften.
The prolonged spell of job losses is the most extended period of contraction since early 2011,excluding the Covid-19 downturn, highlighting economic challenges in the UK.
Despite these figures, some analysts urge caution over the PMI's apparent gloom, pointing out that it merely indicates how many firms are cutting output or employment.
Economists note that the Chancellor is focusing on potential public spending cuts in the run-up to the spring statement to uphold fiscal targets amidst economic pressures.
The tepid PMI performance implies the economy continued to flatline in the first quarter, reflecting a broader trend of reduced growth momentum.
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