Business activity across the UK has declined for the first time in a year and a half, as rising global trade tensions take a toll on the British economy.
According to new data from S&P Global, the UK services sector saw a downturn in April, ending a 17-month streak of growth. The slowdown pulled the wider private sector into contraction, raising fresh concerns about economic stability.
The S&P Global/CIPS UK Services PMI fell sharply to 49.0 in April from 52.5 in March, marking its lowest level since January 2023. A score below 50 signals a decline in activity.
The drop was largely driven by a sharp fall in new business, particularly from overseas markets. Export orders experienced their steepest decline since February 2021, when the COVID-19 pandemic was still severely disrupting trade.
S&P Global noted that many companies cited risk aversion and delayed client spending as key issues, with growing concerns over global economic uncertainty influencing business decisions.
The latest report highlighted that deteriorating international demand and rising trade tensions were key contributors to the downturn, with many firms reporting weaker domestic demand as well.
The wider UK economy also showed signs of strain.
The UK Composite Output Index, which combines data from both the services and manufacturing sectors, dropped to 48.5 in April from 51.5 in March.
This marks the first time it has dipped below the 50 threshold since October 2023.
Economists warn that if global tensions continue to escalate, the UK may face further economic headwinds in the months ahead, threatening growth prospects for the second half of the year.
