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\t\tThe UK economy’s services sector is suffering from reduced consumer spending.\t<\/p>\n\t\t\tWednesday 03 June 2026 10:50 am\n\t\t\t<\/p>\n
\t\tThe UK economy’s services sector is suffering from reduced consumer spending.\t<\/p>\n
A combination of feverish political speculation and knock on effects from the war in Iran has culminated in a \u201creversal of fortunes\u201d for the UK economy, as new data suggests activity across the private sector declined in May.<\/p>\n
S&P Global\u2019s monthly survey of hundreds of firms has shown that business across services companies declined in May, ending a 13-month run of growth.\u00a0<\/p>\n
The composite purchasing managers\u2019 index (PMI<\/a>), the score tracking activity across the UK economy, dropped below the 50-figure threshold for neutrality in activity.\u00a0<\/p>\n The drop was described as a \u201csetback\u201d for the UK economy as services firms were hit by reduced consumer spending across travel, tourism and leisure.\u00a0<\/p>\n Firms attributed the drop in activity to political uncertainty and concerns about the effects of the Iran war, which has disrupted global trade and raised fears of supply shortages.\u00a0<\/p>\n Tim Moore, economics director for S&P Global, said the decline across the services sector \u201csignalled a reversal of fortunes in May\u201d as the impact<\/a> of the Iran war is now set to be felt across the UK economy.\u00a0<\/p>\n \u201cMany service sector companies noted that the Middle East conflict had an adverse impact on sales pipelines and general business prospects,\u201d Moore said.<\/p>\n \t\t\t\t\tRead more<\/p>\n \t\t\tRecord \u00a34bn revenue for accountancy firms \u2018may reinforce\u2019 hawkish rate outlook\u00a0<\/a><\/p>\n \u201cThose in the hospitality and transportation sectors typically commented on squeezed discretionary spending and pressure from sharply rising input costs, while professional services firms reported a setback from rising risk aversion among clients.\u201d<\/p>\n UK economy set for \u2018stagflationary\u2019 outlook<\/p>\n A rise in cost burdens on businesses eased slightly from April\u2019s three-and-a-half-year high although the majority of respondents to the survey reported higher input prices.\u00a0<\/p>\n The rate of output pricing was lower than in April but firms said they were prepared to pass through the costs of higher fuel prices and payroll costs onto buyers.\u00a0<\/p>\n The survey also showed export sales easing in May and employers taking a more \u201ccautious\u201d approach on taking on more workers.\u00a0<\/p>\n The pace of job shedding<\/a> was the fastest it has been since February, according to researchers.\u00a0<\/p>\n WPI Strategy chief economist Martin Beck said the data suggested \u201cthe outlook has become more stagflationary<\/a> than it appeared only a few months ago\u201d.\u00a0<\/p>\n He added: \u201cThe key question now is whether the recovery seen earlier this year can withstand a period of elevated global uncertainty. May PMIs suggest it has weakened, but not yet been derailed.\u201d<\/p>\n \t\t\t\t\tRead more<\/p>\n