UK Services Sector Contracts First Time Since October 2023

Britain's services sector, which makes up a major share of the UK economy, contracted in April for the first time since October 2023, ending a 17-month expansion streak. The S&P Global UK Services Purchasing Managers Index dropped sharply to 49.0 from 52.5 in March, with the decline marking the steepest contraction in over two years. The downturn was driven by falling overseas orders, weakened domestic demand, and heightened business uncertainty, largely attributed to global financial market turbulence and disruptions caused by U.S. tariff measures. Firms reported reduced new orders and employment, while input costs rose at the fastest pace since July 2023 due to higher payroll taxes and minimum wage increases. Business confidence has also deteriorated to its lowest level since 2022, with many service providers bracing for ongoing economic volatility and increased recession risks. The Bank of England is expected to consider these challenges in its upcoming interest rate decisions.