UK service sector confidence higher in May than since before autumn budget
Bosses in the UK’s services sector were more optimistic last month than they had been since before Rachel Reeves’ debut budget, according to new data, as they began to see beyond the uncertainty sparked by Donald Trump’s tariff war.A survey of business leaders showed many were looking forward to improved sales and investment over the next six months, despite an increase in US import tariffs to their highest level since the 1930s.The S&P Global purchasing managers’ index (PMI) rose from April’s 27-month low of 49.0 to 50.9.
A figure above 50 indicates a period of expansion,Services companies have been unaffected directly by tariffs imposed by the White House, which have so far been levied on goods such as steel and cars,But they have suffered from the dampened effect on global consumer and business confidence,Tim Moore, an economics director at S&P Global, said the services sector, which represents about three-quarters of the UK’s business activity, had “regained its poise” in May after “improving confidence among clients and fewer reports of tariff concerns”,He added: “Optimism reached its highest level since October 2024, which reflected forthcoming business investment plans alongside hopes of a turnaround in sales pipelines and improving domestic economic prospects.
”Optimism among UK businesses fell in the wake of the chancellor’s first budget in late October, which included increased taxes on UK companies.Some analysts said the services sector survey showed the UK business sector had proved to be stronger than many forecasters predicted.Official figures showed the economy expanded by 0.7% in the first three months of the year.Rob Wood, the chief UK economist at the consultancy Pantheon Macroeconomics, said the economy had “passed the worst” after Trump “walked back from his more ruinous tariffs”.
He accused the Bank of England of being too pessimistic about the resilience of the UK economy after the PMI and other survey data showed “the domestic economy is likely expanding steadily, if unspectacularly”.Mark Swannell, the chief economic adviser to the EY Item Club, said the higher services PMI and a weaker recession in manufacturing pushed the composite PMI, which brings together responses from manufacturing and services businesses, into positive territory for the first time since March.The services index increased from a first-estimate reading last month that showed the sector had recovered, but only to 50.2.Moore said the aftermath of the tariff shock in April was still taking a toll on sales and employment in May, with firms reacting to lower orders by continuing to lay off staff.
Sign up to Business TodayGet set for the working day – we'll point you to all the business news and analysis you need every morningafter newsletter promotionHe said: “Prevailing demand conditions remained challenging in May, as signalled by a sustained reduction in total new orders across the service economy.Survey respondents mostly cited cuts to discretionary business and consumer spending.“Reduced workloads and pressure on margins from increased payroll costs meant that headcounts remained under close scrutiny.Aside from the pandemic, the current eight-month period of falling employment numbers is the longest streak since 2008-10.”Reeves will expect her pledges to increase investment in road and rail projects across the regions, which she announced on Wednesday, to further boost private-sector optimism and business investment.
Earlier this week the Organisation for Economic Cooperation and Development (OECD) cut its forecast for UK growth this year and next, saying the UK would be unable to avoid the impact from a slowdown in global trade triggered by US tariffs,In line with analysis by the Bank of England, it said a growth spurt in the first quarter would prove to be short-lived and the economy would expand by only 0,25% in each quarter next year, after a growth rate of 1,3% in 2025,The OECD praised Reeves for maintaining high levels of public investment despite heavy constraints on Whitehall spending but said it would have little effect on growth in the short term.
The Office for Budget Responsibility, which provides independent forecasts for the Treasury, has predicted growth will hit 1.9% next year.However, its estimate was made in March before Trump announced his tariffs.
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Contraception warning over weight-loss drugs after dozens of pregnancies
Women using weight-loss drugs have been urged to use effective contraception after dozens have reported becoming pregnant while taking the medication.The Medicines and Healthcare products Regulatory Agency (MHRA) has issued its first alert to the UK public regarding contraception and weight-loss medications after it received 40 reports relating to pregnancies while using drugs such as Ozempic, Wegovy and Mounjaro.Ozempic and Wegovy, which both contain semaglutide, work by mimicking a hormone called GLP-1 that triggers an increase in the production of insulin, slows the rate at which food is digested in the stomach and reduces appetite.Mounjaro, which contains the active ingredient tirzepatide, also acts on a second hormone involved in appetite and blood sugar control. Although these have been referred to as “weight-loss injections”, not all are authorised for weight loss
People with cancer face ‘ticking timebomb’ due to NHS staff shortages
People with cancer face a “ticking timebomb” of delays in getting diagnosed and treated because the NHS is too short-staffed to provide prompt care, senior doctors have warned.An NHS-wide shortage of radiologists and oncologists means patients are enduring long waits to have surgery, chemotherapy or radiotherapy and have a consultant review their care.Hold-ups lead to some people’s cancer spreading, which can reduce the chances of their treatment working and increase the risk of death, the Royal College of Radiologists (RCR) said.NHS cancer services are struggling to keep up with rising demand for tests, such as scans and X-rays, and treatment, created by the growing number of people getting the disease.Evidence the RCR collected from the heads of NHS cancer centres across the UK and the clinical directors of radiology departments shows that delays to potentially “life-saving” care occur because of “chronic” workforce gaps
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