UK Business Confidence Takes a Dip: What’s Really Happening?
Bottom line: UK firms feel a bit less pumped than usual. The Accenture / S&P Global UK Business Outlook reports confidence hit its lowest level this year in October.
Headline Numbers
- Net balance of firms expecting activity to rise in the next 12 months fell to +37 % (down from +40 % in June and +43 % in February).
- Still looking bright compared to the rest of the world: global average is +25 % and Europe lags at +16 %.
Why the Jitters?
Two big culprits: the cost‑of‑living surge and higher interest rates. Even with inflation easing a bit, people are worried about how much money they’ll actually have to spend.
Sector‑by‑Sector Snapshot
- UK services — optimism slid to +36 %. The hospitality niche actually dipped into negative territory, proving that the hottest bars aren’t necessarily the buzzier.
- Manufacturers — a modest uptick to +44 %, with transport and food & drink sectors showing extra enthusiasm. Fresh product launches, tech upgrades and a move closer to home (reshoring) are the motivating sparks.
Inside the Talk from Accenture
“UK businesses are still more upbeat than their European and global counterparts,” says Ewan Mackay, Strategy and Consulting lead at Accenture UK & Ireland. “But the roller coaster that is interest rates and high prices is pulling the seat belt a bit tight. If you’re running a firm, now’s the moment to act on your bright plans, invest strategically, bring in top talent, and weave in the right tech to keep the growth engine humming.”
Other Key Takeaways
- Lower input‑cost inflation (+47 % for inputs, +43 % for outputs) is keeping price rises in check – the lowest since Feb 2021.
- Profit optimism actually rose in October, the only country to do so in this survey.
- Salary expectations nudged up slightly to +73 %, hinting that companies will keep the wage growth marathon going.
- Companies foresee a ‐4 % drop in R&D spend – a hit from the ratcheting interest rates that choke creative budgets. Capital expenditure is also on a dip, especially among manufacturers.
So, while the outlook is still more positive than most of the world, the big picture feels a bit more shaky. The good news? Businesses that grab the opportunity now—through smart hiring, tech upgrades, and strategic investments—could flip the tide and turn optimism into solid growth.
